Business confidence in WA has come to an abrupt halt, breaking an almost two-year upward trend.
CCI’s June quarter Survey of Business Expectations reveals the business community’s medium-term confidence has taken a sharp dive.
Forty-five per cent of businesses expect conditions to worsen over the next 12 months—an increase of 13 per cent from the March quarter.
This latest analysis is a timely reminder that business confidence and investment must be at the forefront of any policy decisions in the lead up to the State budget.
Short-term business confidence also continued to fall, with 66 per cent of businesses expecting trading conditions to worsen over the next three months—up from 56 per cent.
It comes as WA’s economy is showing improvement and is continuing to generate new full-time jobs, with July labour force figures revealing our unemployment rate was now at 5.4 per cent—the lowest in two years.
CCI Chief Economist Rick Newnham says the McGowan Government has made job creation a priority for its first term which is why now, more than ever, businesses must be supported by policies that will restore confidence and empower industry to create jobs.
“WA business will be doing its fair share to help repair the budget by picking up the bill for electricity charges which the Government previously subsidised,” he says.
“CCI supports the McGowan Government’s recently announced policy to increase the fixed charge component of electricity bills, despite the significant impost it will have on businesses that are already doing it tough, because we recognise the need for long-term energy efficiency.
“It is critical that in the upcoming budget, the State Government does not introduce any measure or policy that would dampen business confidence or deter economic growth.
“This means no new taxes or increases to the rate of existing taxes, and no increases to business fees or levies.”
It is also vital that WA employment is supported by maintaining the current payroll tax rate and threshold.
Mr Newnham says payroll tax is a roadblock to employment, particularly for businesses approaching the tax-free threshold, and any increase to this tax burden will cost jobs.
“We know that compared to other states, WA’s tax regime is appropriate, but spending under the former government was completely out of sync with its revenue,” he says.
“That is why to fix the Budget the State Government must reduce spending to its pre-boom size to pay down the State’s $42 billion debt and regain its AAA credit rating.”
►To read the full Survey of Business Expectations, please click here.