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RBA Cut Welcome

MEDIA RELEASE
RBA Cut Welcome But Eyes Turn to Budget For Small Business Relief

Bibby outlines pre-Budget wish list 

Sydney, May 7, 2013 – Bibby Financial Services, the world’s leading debtor finance provider, welcomes today’s rate cut to 2.75 per cent, however is warning any rise in business taxes in next week’s Budget or cuts to business concessions could push many small businesses to lay off workers or into bankruptcy.

With the Federal Government’s revenue for 2012/13 expected to decline by as much as $17 billion, it is now considering all revenue-raising options, including higher taxes on business, to help minimise the size of the Budget deficit. 

Gary Green, National Sales Director, Bibby Financial Services, said any rise in business taxes or cuts to small business tax concessions or programmes in this Budget would hit small businesses hard at precisely the wrong time.

“The small business sector is facing difficulties on many fronts. Economic growth is lacklustre and the global economy is fraught with uncertainty. Business aren’t investing because they are burdened by too much red tape, political and policy uncertainty, they are experiencing cash-flow difficulties and they will have to fund increased superannuation contributions for employees from July 1. 

“Any further hit in this Budget would force some small businesses to shelve employment plans, lay off workers or cut back on their capital spending. It would hit confidence hard and stunt economic growth and a broader recovery, particularly in non-mining states. The small business sector is a huge private employer and crucial to the overall health of the economy,” Mr Green said.  

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This week’s Dun & Bradstreet National Business Expectations Survey shows actual business investment for the March quarter of 2013 dropped to its lowest level since early 2009 just after the global financial crisis. The capital investment index, which measures investment intentions, for the third quarter of 2013 has fallen to its lowest point in more than three years. Businesses are also shelving employment plans for the months ahead.

“The economic data reveals capital spending is very weak and confidence has dived. While lower interest rates should help to offset further deterioration, the Federal Government needs to do more to promote business confidence and certainty in this Budget. Otherwise we may see the unemployment rate climb well over 6 per cent,” Mr Green said. 

The Reserve Bank’s recent credit data highlights the huge lack of business confidence. Business credit was up by just 1.6 per cent over the year to March, below overall credit growth of 3.2 per cent and well behind housing credit growth of 4.4 per cent.

“The business sector is falling behind other sectors of the economy. That means rising unemployment and job losses unless its prospects brighten.” 
 
The latest Bibby Barometer survey reveals small businesses would like to see reduced taxes in next week’s Budget (51%), a reduction in Government red tape (40%) and relaxed import/export regulations (20%).

But small businesses aren’t optimistic about a positive outcome. The number of decision makers who expect the Budget to actually hinder small business growth outnumber those that expect it to support small businesses by almost two to one (47% versus 25%).

ENDS

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