On Saturday this week, the ACT will elect a Legislative Assembly to govern us for the next four years, and the Business Chamber is looking forward to working with all our new and returning MLAs as we aim to make Canberra the greatest place in Australia to do business.
Irrespective of which party or parties form the next Government, there are some real challenges facing the business sector here in the ACT that need attention. The cost of doing business is significant and increasing, and the increased cost of doing business flows directly onto the price of goods and services here in the ACT.
One of the biggest headaches for businesses is the ongoing high interest rates, which are continuing to keep a squeeze on the economy. Not only do they keep a lid on consumer spending, but it also means that business debt is costing more to service. Many businesses have loans to support their growth – and these debts are costing a lot more at the moment. Around the world, interest rates are starting to decline, breathing some life into the consumer economy. Downwards movement here in Australia is needed sooner, rather than later, and all eyes will be on the Reserve Bank’s decision in early November. While interest rate settings are outside the control of the ACT Government, they do have a significant impact on what’s happening inside our local economy.
Another factor is the cost of insurance, with big increases in premiums being seen over the past couple of years. A significant driver is the cost of Workers’ Compensation Insurance, where rapidly escalating premiums are driving up the cost of doing business. Some businesses are reporting that their Workers’ Compensation premiums for ACT workers are double the price of what they pay across the border, just a few minutes’ drive away in Queanbeyan. This doesn’t make a lot of sense, but does suggest there is an urgent need to review the arrangements for Workers’ Compensation here to make sure that businesses (and their customers) are not paying above the odds.
Payroll tax has been in the news this week. Smaller businesses here are lucky that they don’t need to pay it, but the fact is that those businesses that are caught in the payroll tax net now pay the highest rate in the country. This acts as a disincentive for investment here and encourages firms to look for growth opportunities elsewhere. The recent moves to impose a “surcharge” on larger firms have made these incentives substantially worse – and some smaller businesses that operate independently here are now finding that they are liable for the tax by virtue of being owned by larger businesses.
There’s sometimes a perception that it’s okay if businesses just pay more – but higher taxes and higher costs for businesses are ultimately passed on to customers. This means we pay more for everyday goods and services, making Canberra a more expensive place to live. It also makes it harder for businesses to keep growing, innovating and investing: the Chamber’s latest Canberra Business Beat survey suggests that just under a quarter of firms are expecting to shrink over the next 12 months.
What can we do about all of this? There’s certainly no silver bullet – but the Business Chamber will be encouraging our new MLAs to take a very close look at regulations, compliance requirements, fees and charges. There’s no reason Canberra can’t be the greatest place in Australia for business, and focusing on the cost of doing business would be a great starting point.
