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Canberra has nation's worst business survival rates

Andrew Blyth CEO of The ACT & Region Chamber of Commerce & Industry speaks at their Business Crisis Summit.

Andrew Blyth CEO of The ACT & Region Chamber of Commerce & Industry speaks at their Business Crisis Summit. Photo: Rohan Thomson

Small businesses in the ACT have the nation's lowest survival rate, and a survey shows more than three quarters of business owners expect conditions to worsen.

The insular ACT economy, slow tender times and fears for finding a buyer for their operation were just some of the worries of Canberra's small business owners at the Business Crisis Summit on Wednesday.

About 190 people from 130 businesses and community organisations attended the ACT & Region Chamber of Commerce and Industry event at Ainslie, sharing ideas on how to reverse the business survival rates.

Chamber chief executive Andrew Blyth said the city's next century would be a ''private sector century'', but a chamber survey showed businesses had largely pessimistic views about the next year.

''We've got the lowest business survival rates in the nation, and in the last 12 months we have seen a 40 per cent increase in liquidations and the chamber itself has seen a sixfold increase in phone calls to its workplace relations hotline seeking advice about downsizing,'' he said.

The survey found 78 per cent of the businesses responding believed the ACT economy would be somewhat or much weaker in the next 12 months. About 55 per cent predicted the same for the national economy.

More than half of the 60 businesses who responded to the question said their profitability was down from six to 12 months ago, with about 45 per cent expecting their profit position to be worse next year.

Mr Blyth - supported by conclusions from many of the summit's small group sessions - said the removal of red tape and simplifying tax and employment laws were essential.

''Small business needs to be treated differently to large business, particularly when it comes to compliance and the steps they need to take, there's example after example of duplication of paperwork that does seem unnecessary,'' he said.

Australian Chamber of Commerce and Industry chief economist Greg Evans said different indicators pointed to below-trend growth for the 2013-14 financial year.

''There is no doubt there is a crisis of confidence and sentiment levels are poor - business sentiment levels and consumer confidence,'' he said.

Rene Sedlmaier, owner of Fyshwick communications company Sedcom, told the crowd about the difficult decision to cut two of his six workers since Easter after reduced spending from his clients.

''Probably the hardest thing I've had to do in business is let two people go who were performing,'' he said.

Mr Sedlmaier called for a shift from monthly to quarterly business tax payments.

Economic Development Minister Andrew Barr told The Canberra Times the government was taking significant steps to support businesses in Canberra, including through nation-leading tax reform and removing red tape.

''Last year the ACT government abolished commercial land tax, lowered payroll tax and began phasing out insurance tax and stamp duty,'' he said.

Mr Barr said the Red Tape Reduction Panel was identifying regulations which imposed unnecessary burdens or costs, with the abolishment of motor vehicle registration tickets, providing for e-lodgement of rental bonds and introduction of a red-tape reporting website among early reforms.

A law passed on Tuesday also means a range of businesses, including real estate agencies, motor vehicle repairers and travel agents, can now apply for new licences every three years instead of annually.

Mr Barr said that despite higher than average failure rates - 40 per cent of businesses that started in 2008 were not operating four years later - during 2011-12 there was a net increase of 403 ACT businesses.

''This represents an increase in trading businesses of 1.6 per cent, which was the highest of all states/territories and four times the national change of 0.4 per cent,'' he said.

27 comments so far

  • Reason...Labor, ..45 businesses are closing everyday across Australia..Labor are economic vandals

    Commenter
    Martin Says
    Location
    Canberra
    Date and time
    August 14, 2013, 12:54PM
    • I can tell you the cause of the problem - the likely change of government and traditional incoming liberal government decimation of the public service - but I can't tell you the answer.

      Commenter
      Rob
      Location
      Canberra
      Date and time
      August 14, 2013, 12:58PM
      • The "decimation" of the public service has already started under Labor. It's due to economics not ideology. The economy and government revenues are both weaker than they should be, meaning the government (either Labor or Liberal) has to cut costs. As Canberra has a higher percentage of the federal government concentrated here compared to anywhere else, we feel that effect disproportionately and it flows through to local businesses. And if you're talking traditions of cutting public service numbers, I'd say that Gillard/Swan/Rudd/Bowen have maintained the Labor tradition set by Keating of reducing public service employment once they ran out of other people's money.

        In regards to Andrew Barr having "abolished commercial land tax" the reporter should have mentioned that he massively increased commercial rates at the same time. From what my business clients are telling me, the increase in commercial rates has meant they are paying more in ACT taxes than they were before. That does not make it "easier and cheaper to do business in the ACT".

        Commenter
        James Daniels
        Location
        Canberra
        Date and time
        August 14, 2013, 1:44PM
    • Didn't they say that property was booming in Canberra? Based on what economic fundamentals?
      So much for fundamentals, all the indicators say economy tanking, but taxpayer funded support for the housing industry just keeps the bubble inflated.

      Commenter
      TheJoker1214324
      Date and time
      August 14, 2013, 1:20PM
      • Based on record low interest rates and probably creating a bubble.

        Commenter
        selector 2
        Date and time
        August 14, 2013, 2:40PM
    • How can you decimate the Public Service when Labor has got rid of everyone now by stealth. Don't be a Labor stooge and just look at what they have done. Cut, slash and burn. We are nearly broke now.

      Commenter
      ngwalker
      Location
      Banks
      Date and time
      August 14, 2013, 1:31PM
      • You are spot on. Our business is receiving revenue from government at 1999/2000 rates, costs have esculated and volume is down. We will probably not survive the next year.

        Commenter
        Irene
        Date and time
        August 14, 2013, 1:45PM
    • I like how everyone blames the government for their business ills. The hypocrisy is evident and somewhere schizophrenic in this town. The howls and cries from the Liberal voting private sector calling the public service to be cut because it's bloated and not realizing that most of your revenue is coming from these very same wages.

      I suggest you could look at it this way - Canberra and the public service have up until recently been boosted by the massive flows of money coming from the mining and resources sector, flowing into taxes and then public service wages. These public servants then go out and spend. The result a boom in spending on retail construction, offices, housing, cafes, restaurants and general services.

      What happens when there is a boom? everyone starts up a business thinking that the times are good and going to get better, forgetting that when things slow down you're going to be left with over investment and revenues spread thinly across all the newly created cafes, restaurants, and service businesses.

      This is exactly what is happening now and has absolutely zilch to do with which party is in government. You can whinge about the red-tape, penalty rates and taxes, but I didn't hear anyone whinging when the times were good.

      All your problems are caused by oversupply, not government regulation.

      Commenter
      Bretto
      Location
      Canberra
      Date and time
      August 14, 2013, 2:11PM
      • So what you're saying is that we had:
        1. unsustainable government spending
        2. public servants wanting to spend their wages
        3. people setting up businesses to meet the demand
        4. the government reducing spending
        5. public servants cutting back on spending due to uncertainty over the future of their jobs
        6. businesses going bust

        The government has a much greater capability to look into the future than a small business person, but you seem to be placing all the blame on the business owners.

        The Fair Work Act has not helped. Its now more expensive to employ people and businesses have to spend more time & money making sure they comply. So compounding the reduction in revenue there are increased costs imposed by government. I was talking to a business person last week and they said this year is the first year they have paid minimum wages - wages have been pushed up so high that businesses aren't being left with much discretion when it comes to being able to pay more efficient workers more than less efficiant workers, which can lead to reduced productivity.

        You may not have heard complaints when times were good, because business owners then could at least say we're still profitble, but that isn't the case for many businesses now.

        Commenter
        James Daniels
        Location
        Canberra
        Date and time
        August 14, 2013, 5:07PM
      • Apparently the Government does not have a greater capability to look into the future as is evident in the recent budget forecast downgrades, the poor mining tax revenues, and the cost blowouts for the NBN, amongst other forecast disasters, oh and the solar feed-in-tariff fiasco.
        I agree that there have been additional costs imposed by the Fair Work Act. But having said that, it is in response to some of the dodgy practices that go on in the world of business. And yes the majority are fair to their employees, but as we all know the law isn't determined by the law abiding majority, it's determined by the minority who flaunt it.
        Wages are pushed up on the demand side, and this is exactly the point I was trying to make. When times are good, business is booming and revenues are stomping in, wages increase because employers need to compete with other employers for staff. The mining industry is a text book example of this. Wages went through the roof when the boom was in full swing, but have now taken a massive hit because of cost pressures and an oversupply of qualified employees. The same could be said for retail etc. Now, as people are withholding their spending and unemployment is rising then business revenue falls. To compensate, pressure is put on wages, and business complain about excessive government regulation. All part of the great economic cycle of life.

        Commenter
        Bretto
        Location
        Canberra
        Date and time
        August 14, 2013, 11:55PM

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