Even before the pandemic, Canberra had the highest rate of business closures in Australia and the lowest five-year business survival rate.
While many have speculated on the myriad of factors that drive the high closure rates, the Canberra Business Chamber is calling on the ACT Government to conduct regular surveys of the business community to better understand what is causing businesses to fail in the Territory.
Chamber CEO Graham Catt said while the ACT has an “enviable level” of business start-ups, it also has the highest business closure rate and lowest long-term survival rate over five years.
“We need to understand better what’s driving that closure rate,” Mr Catt said. “Is it something systemic? There’s a lot of speculation.”
To provide that clarity, the Chamber is calling on the ACT Government to commit to surveying the ACT business community regularly to allow for a better understanding of the conditions local businesses are operating under.
Current figures are compiled from a variety of sources including Access Canberra and the Australian Bureau of Statistics (ABS), but the Chamber wants “one coordinated set of data developed consistently over time”.
“We currently rely on a range of ad hoc data services … that’s the missing piece,” Mr Catt said.
Earlier this year, the ABS published business growth data for the 2019-20 financial year.
While the ACT boasted the highest start-up rate in the country, it also had the highest proportion of businesses which closed over the 12 months at 13.7%.
The ACT has led the nation on that statistic since at least 2016.
Additionally, just 62% of all businesses operating in the ACT in June 2016 were still trading in June 2020, Australia’s lowest survival rate over those four years.
Minister for Business Tara Cheyne defended the data, saying the ACT economy is “not comparable with any other jurisdiction” due to the “high portion of the public service in our economy”.
“The public service provides opportunities for people to move in and out of public sector roles as either permanent employees or under contracted sole trader arrangements,” she said.
“The latest ABS statistics are showing just over 3% unemployment and 8,800 ACT job vacancies. This means many business owners and employees who might be affected by a business winding up are usually able to find employment elsewhere.”
Ms Cheyne said the Chamber’s budget submission will be considered.
“The ACT Government will work with the Canberra Business Chamber about what data might be most useful to help better understand the conditions that lead to business closures,” she said.
Shadow Minister for Business Leanne Castley supported the Chamber’s call for regular surveys.
“We need a regular audit to monitor the health of our small business sector,” she said, “and we need real government support for a sector that employs one in four of Canberra’s workers.”
In April, the Canberra Liberals called on the ACT Government to establish a Small Business Ministerial Advisory Council to “give small business a real say in government decision-making”.
The Labor-Greens Government rejected the motion unanimously, arguing it already consulted small businesses through discussions, forums, workshops and panels.
“Small business constantly tell me how hard it is to start and run a business in the ACT; rates are high, costs are dearer than over the border and there is little, if any, government support,” Ms Castley said.
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