Business confidence plummets following State Budget
Wednesday, 2 August 2017
Deteriorating business conditions, coupled with the South Australian Government’s controversial State Budget, have triggered an alarming increase in pessimism for the future, and a significant drop in business confidence amongst South Australians, according to the latest BankSA State Monitor released today.
Conducted by independent research firm, The Sexton Marketing Group, the State Monitor – now in its 20th year - reveals that local business confidence has collapsed to a four-year low, tumbling 8.3 points since the last survey in February 2017, from 104.0 points to 95.7.
Worryingly, optimism about the future business climate in South Australia over the next 12 months has also fallen to its lowest level since 1998, while state pride has dropped to its lowest level on record. Businesses have also reported lower employment creation over the past three months, while their intention to create new jobs over the next three months is also down.
Significantly, the State Monitor findings show the recent State Budget has contributed to the alarming spike in pessimism among respondents.
As evidenced in the graphic below, net pessimism ratings of -46% for business and -42% for consumers were recorded in response to how this year’s State Budget makes respondents feel about the future, compared with -10% for business and -7% for consumers in response to last year’s State Budget.
BankSA Chief Executive, Nick Reade, said the State Monitor results are a major cause for concern, naming the State Government’s bank tax as a contributing factor.
“This nosedive in South Australia’s business confidence is disturbing,” Mr Reade said.
“These latest survey results have no doubt been impacted by the recent State Budget and the Government’s controversial bank tax, which is clearly inhibiting business confidence which in turn undermines investment in South Australia leading to fewer jobs.
“Make no mistake, the bank tax is a huge threat to our state economy. It’s already hindering business confidence and will undermine our competitiveness on the national stage.”
Mr Reade warned that South Australia’s economy could find itself in serious trouble if business confidence continues to fall.
“This concerning drop in business confidence is feeding into an increased reluctance to hire new staff and invest in new technology, which is counter-productive for a healthy economy,” he said.
“We need to put the brakes on this ‘bunkering down’ mentality that an increasing number of businesses have adopted in recent times due to their lack of certainty, because if it takes hold it could easily lead to recessionary conditions down the track.”
The State Monitor also showed that despite a small rise in the latest survey, consumer confidence in South Australia remains at historically low levels at 98.7 points, up from 97.8 in February but still below the 100-point baseline.
Alarmingly though, consumer confidence regarding lifestyle stability, mood, state pride and the climate for consumer spending in the next 12 months fell to their lowest levels ever reported.
Confidence in South Australia’s rural regions has also plummeted to an all-time low.
In fact, business confidence in rural South Australia crashed by 13.8 points from 106.1 to 92.3, while consumer confidence continued to fall also, dropping by 4.9 points from 92.5 to 87.6.
State Monitor findings from the rural regions include:
West and North (Upper Spencer Gulf, Far North and Eyre Peninsula):
- A significant decrease in business confidence – down 12.4 points from 105.2 to 92.8; and
- A decrease in consumer confidence – down 0.1 points from 88.2 to 88.1 (extending to 10 consecutive surveys its position below the 100-point baseline).
Southern (South Coast, South East, Hills and Murray Plains):
- A large decrease in business confidence – down 8.9 points from 105.2 to 96.3; and
- A significant decrease in consumer confidence – down 15.6 points from 103.8 to 88.2.
Mid North and Riverland (Barossa, Mid North, Riverland and Yorke Peninsula):
- A significant decrease in business confidence – down 22.0 points from 108.7 to 86.7 (its lowest business confidence level since 2001); and
- A small increase in consumer confidence – up 1.4 points from 85.5 to 86.9 (making it the only region in South Australia to record an increase in consumer confidence).
Based on a statewide phone survey of 300 consumers and 300 small business owners and managers, the latest BankSA State Monitor is the 63rd monitor in a series that has tracked consumer and business confidence in South Australia since 1997. A baseline of 100 points is used to which the overall survey results are either added or deducted. A result greater than 100 represents a positive result and therefore more optimistic respondents than pessimistic, while a result less than 100 represents a negative result meaning there are more pessimistic respondents than optimistic.