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Small business anxious about economic outlook

smes cut spending

Peter Strong, executive director of COSBOA

The Back to Business Survey 2011 has indicated that small business confidence in the economy is low, with almost a third expecting it to worsen before mid-year, with tax reform, higher interest rates and the emissions trading scheme posing the most significant concerns.

The survey, commissioned by Telstra and the Council of Small Business Organisations of Australia (COSBOA), found that, of the 1000 respondents, only 23% expected the economy to improve, only half as many as shown in the 2009 survey.

Higher interest rates and the associated implications are of greatest concern to small business over the next 12 months, indicated the survey. Costs associated with government compliance, finance, and the potential impact of the emissions trading scheme (ETS) and tax reform also ranked highly as concerns amongst small business owners.

Peter Strong, executive director of COSBOA, claimed that the ETS itself wasn’t the concern, but rather the uncertainty surrounding it.

“The question is ‘What will be the impact on our bottom line, of the carbon tax?’ We need to know,” he told Nett. “When we look into it, if the home owner gets a rebate, home-based businesses and contractors aren’t going to be affected. What we’re talking about is the million [small businesses] that employ other people – retailers, hospitality, manufacturing and transport.”

When asked about uncertainty surrounding interest rates, Strong identified that although the Reserve Bank of Australia (RBA) may be making the right decisions with respect to the econony, it failed to translate them effectively for small business.

“The RBA focus on mining, resources, and big business, but they don’t get small business. In many ways, whatever there decision, it might be the right decision, but they don’t communicate it at all in a way that one million small business employers can understand,” he said.

The survey also found that of the third of businesses accustomed to spending before the end of June, 55% expect to reduce spending this year.

Thirty-one percent of respondents indicated they found the government ‘very unresponsive’ with respect to small business issues. It was indicated by the survey that low confidence in the economy was matched with general dissatisfaction with the small business-related policy offered by the Government, which received a 3.9/10 approval score, the Coalition (4.6/10), the Greens (3.4/10) and Independents (3.8/10).

The survey also demonstrated that 30% of small business owners believed that increasing their online presence would improve the peformance of their business. Networking and debt reduction were also identified as major factors for business improvement.

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