Slump in Business Confidence on Back of Economic Conditions
The Canberra Business Chamber’s latest Business Beat report shows that there has been a slump in business confidence on the back of the Iran War, higher interest rates, inflation and the Federal and local budgets.
“While 39 per cent of Chamber members reported feeling positive at the start of the year, that had slumped to 32 per cent in the middle of the year, and the number feeling negative increased from 30 per cent to 35 per cent ,” Greg Harford, Canberra Business Chamber Chief Executive, said today. “At the same time, 34 per cent of respondents to our survey report that they are expecting their businesses to shrink over the next 12 months – a big jump from 14 per cent at the start of the year.
“The latest survey results also show more firms reporting that they are not making a profit– 37 per cent compared to 24 per cent previously; and 27 per cent are expecting to shrink their headcounts over the next 12 months, compared to 15 per cent earlier in the year. We are very much operating in a world where around a third of businesses are doing well, a third are just scraping by, and another third are facing problems.
“Unfortunately, we are facing a situation where many businesses are deeply challenged by increases in the cost of doing business while, at the same time, customer demand has reduced. This reflects both cost of living pressures impacting households, but also the ongoing attempt to reduce consultancy spend by the Federal Government. There is also significant concern in the business community about Federal and Territory tax settings, particularly the Commonwealth Government’s changes to Capital Gains Tax and trust income, and the expansion of Payroll Tax by the ACT Government.
“The ACT is the only jurisdiction to be expanding its Payroll Tax threshold to make more small businesses pay the tax, and we have the highest general payroll tax rate in the country. This policy, announced in the 2025 ACT Budget came into effect on 1 July this year, meaning that the impact is only just starting to be felt by businesses.
“While the outlook is fairly gloomy for many, those who are feeling positive cite a continued flow of work and projects, support from the local business community, new techologies and Canberra’s skilled workforce.”
