By The Editor
General business conditions are worsening for small and medium sized enterprises in the first part of 2012, and business owners expect things to get even tougher, according to ACCI’s latest Business Expectations Survey.
The index of general business conditions dropped to 43.8 in the December quarter (50 representing a ‘neutral’ score), while expected economic performance declined from 42.7 to 39.9.
The ACCI survey shows the extent with which many businesses are struggling – export sales are declining, non-wage labour costs (including red tape and regulation requirements) remain high and the employment index moved back into ‘contraction’ territory after two years of growth.
ACCI’s director of economics and industry policy, Greg Evans, said much of the negativity results from the financial crisis in Europe, which is hindering investment, but the results can also be attributed to domestic issues like the nature of the ‘two-speed’ economy, where non-mining industries do it far tougher.
“Beyond the booming mining sector the economy appears to be approaching stalling speed, as evidenced by the weakest year-end growth in employment in almost twenty years,” Mr Evans said.
Some relief was expected to be handed down in the form of an interest rate cut, but the Reserve Bank decided to keep interest rates on hold for February, deciding to wait longer before judging if more rate relief was needed.
In VECCI’s view, the stats show that more than just interest rate cuts are needed to restore confidence in many of our vital industries. While hopefully the effect of the previous rate cuts will be seen in future business expectation surveys, it should be complemented by government action to reduce business-related red tape and regulations.
At a federal level, new Small Business Minister Mark Arbib has identified red tape as an area he plans to work on – we look forward to the action that will follow.
Mark Arbib has said that he wants to cut red-tape but hasn’t really said where he can do this. I see the Coalition wants to remove the paid parental leave pay clerk, hopefully the government will support this.