Chamber calls for action to address worrying rate of business closures

The Canberra Business Chamber has called on the ACT Government to urgently address the high rate of business closures in the nation’s capital by funding critical sector research and delivering a detailed strategic plan for business growth.

Chamber CEO Graham Catt said the lack of meaningful data around the underlying issues threatening the long-term survival of the Territory’s small to medium-sized businesses presented a significant barrier to economic recovery in the ACT.

“During the peak of COVID, it was to be expected that business closures would occur,” Mr Catt said. “But even before the pandemic, we had a trend of unusually high failure rates compared with the rest of Australia. This shows no sign of reversing, and unless we have a strong understanding of the impediments to running sustainable businesses, and the policy measures in place to address them, exit rates will continue to grow.”

At the end of June 2020, there were 30,800 businesses in the ACT – reflecting steady overall growth year-on-year. However the ACT has the lowest long-term business survival rate in the country: within five years, only 62.5% of ACT startups are still trading (compared with a national average of 65.1%).[1]

In its 2021-22 ACT Budget Submission to the ACT Government yesterday, the Chamber called on Chief Minister Andrew Barr to allocate funding for a regular survey of the local business community and economic conditions, similar to the work done in the UK by the Open University[2].

The Quarterly Survey of Small Business in Britain tracked the key drivers of change for small to medium-sized businesses, providing critical data on which policy makers, support providers and the business community could act, and plan for the future.

Mr Catt said the ACT Government’s Jobs & Economic Recovery Plan[3] acknowledged the leading role the private sector would play in jobs growth in the ACT, but to achieve the plan’s projected 250,000 jobs by 2025, high-quality data, along with a business growth strategy addressing sector targets, future skills and labour demand, and the development of educational and training facilities was essential.

“Planning ahead is critical if we want to achieve business and jobs growth,” Mr Catt said. “We hear time and again from our members that skills and labour shortages are threatening their livelihoods and this is just one of the issues that needs to be urgently addressed through a combination of clever strategy and compelling sector data.”

Mr Catt said about 98 per cent of Territory companies were small or micro-sized. “They are the backbone of the ACT. The only way to stop the closure rate is to have a clear plan for the future – to understand what the problems are, and have the policies in place to fix them,” he said.

“The Chamber is ready to work with the ACT Government on developing a blueprint for the long-term economic prosperity of the Territory, including meeting the jobs growth targets in its recovery plan. The key to this is supporting a diverse, prosperous and sustainable business community.”

[1] Australian Bureau of Statistics (2021) Counts of Australian Businesses, Including Entries and Exits, cat.no.8165.0, Canberra.

[2] Open University (1984-2014) Quarterly Survey of Small Business in Britain, Milton Keynes: Open University Business School

[3] https://www.act.gov.au/actrecovery/plan