Business Owners Dream of a Rudd-led Coalition
Business Owners Dream of a Rudd-led Coalition
Sydney, August 7, 2013 – It’s not going to happen, but small business owners would love to see a Liberal-National Coalition government led by Kevin Rudd, recent research by Bibby Financial Services indicates.
Those that think the Coalition winning the next election will be better for business outnumber those that think the Coalition will be worse for business by a factor of two to one (47 per cent versus 24 per cent). Yet when asked who is the best choice for Prime Minister, 32 per cent named Kevin Rudd, in contrast to 24 per cent for Tony Abbott and 24 per cent Malcolm Turnbull.
“Our research indicates that proprietors of Australia’s small and medium sized (SME) businesses are ambivalent toward government,” Mark Cleaver, Managing Director of debtor finance provider Bibby Financial Services, notes.
“There are huge pressures on businesses with between five and 20 employees – one of the biggest employers in the nation – and the majority think a change in government may help them. Whether they are fully informed about the policies of each party is difficult to know, but it is telling that only seven per cent of those we surveyed could name the Federal Minister for Small Business as Gary Gray.
“It is clear, however, what small business owners want from the next government: a priority given to reducing taxes (32 per cent) and red tape (22 per cent). Next on their wish list is no increase in the GST (21 per cent saw this as their highest priority), followed by relaxation of import/export regulations and improved access to credit,” Mr Cleaver said.
Interest rate cuts are not what they used to be
Despite another interest rate cut by the Reserve Bank of Australia (RBA) yesterday to 2.5 per cent, Bibby’s research shows that SME business owners no longer regard lower interest rates as enthusiastically as they did six months ago. Now 48 per cent believe low and falling interest rates will have a positive impact on their business in the next 12 months. This compares to 57 per cent just six months ago. As many as 20 per cent see this rate trend as negative for their business.
“Our research indicates that interest rate cuts may not be as effective in stimulating the SME sector as rate cuts used to be,” Mr Cleaver commented.
According to the latest RBA credit figures, in the 12 months to June 2013 business credit only rose by a modest 0.9 per cent, housing credit was up by 4.6 per cent and total credit grew by 3.1 per cent. Personal credit rose by 0.2 per cent for the same period.
“Business credit has been sluggish over the past 12 months and our survey shows that outlook for business lending will remain stagnant. A third of business owners we surveyed intend to borrow nothing at all in the coming 12 months, while a further 19 per cent intend to borrow less and only 14 per cent intend to increase their borrowings,” Mr Cleaver said.
The survey found 63 per cent of small businesses are affected by the volatility of the Australian dollar, with 13 per cent being heavily affected. This increasing sensitivity to the exchange rate, is in part, as a result of the Asian market now offering more business opportunities for 41 per cent of Australian small businesses.
Along with the exchange rate, global economic conditions remain a big concern. Just over half (51 per cent) are more concerned about global economic conditions than they were a year ago, and this is little changed in the past six months (47 per cent). In contrast, only 15 per cent are now less concerned.
The biggest challenge facing small business owners is reduced consumer spending. This is closely followed by time management, high fuel costs, increased competition and managing cash flow. The main challenge six months ago was higher fuel costs.
One in four business proprietors and managers now admit they have little time to enjoy family life due to business challenges. Despite this, 71 per cent remain confident about the outlook for their business - a statistic that has remained remarkably consistent in Bibby’s polling since 2011.
“As well as high confidence in their prospects, entrepreneurs are not waiting around for government action, or despondent about the uncertain outlook. Their optimism and spirit flourishes. A quarter of those in the survey expect to expand and buy another business in the coming 12 months and those intending to invest in their business in the coming 12 months continues to rise. Encouragingly, it now stands at 31%, up from 28% just 6 months ago and 20% at this time last year,” Mr Cleaver noted.
Bibby’s SME research study was carried out by Galaxy Research during July.