Business owners in South Australia spend a lot of time doing what they need to do to keep their heads above water and their doors open. Paying bills, employing staff, making sure the wages are correct and managing products or services. The cogs keep turning, keeping our economy moving.
But when a major issue, or what they perceive is a threat to their operations arises, their collective roar can be deafening.
Business owners and operators — many of whom also own property or lease commercial space — are making their voices heard regarding the State Budget measure to introduce land tax aggregation.
The South Australian Business Chamber — William Buck June Quarter Survey of Business Expectations is showing confidence has fallen again, this time hitting levels not seen since late 2017. Confidence has dropped to 84.4 points — down from a high of 116.4 in December 2018. That’s a significant 32-point fall on the index over just two quarters.
December 2017 was the last time the business sector roared with disapproval. Back then it was because they were unhappy with the former State Government’s decision to potentially introduce a bank tax in their 2017 – 18 budget, a measure which would have been passed on to all bank account holders and many mum and dad investors.
We believe the recent fall in confidence can be attributed to the land tax aggregation issue, because national confidence only dipped slightly, and general business conditions fell only marginally by 1.8 points, pointing to conditions easing in general.
The real danger now to the state’s economy is the recent dive in confidence, despite overall conditions steadying. We know confidence translates into transactions, which influences business investment, jobs creation and grass roots spending.
The importance of land tax aggregation cannot be underestimated. Responses to our questions show businesses are expecting a big hit. Many small business operators are concerned that landlords will pass the increases on, putting pressure on their already tight margins. Property owners are also telling us they’re considering downsizing, selling up and moving interstate. They’re cooling on new acquisitions and putting off further investment in our state. Some businesses are anticipating an increase of tens of thousands of dollars of additional land taxes payable.
Another telling tale is that of those who participated in the survey, 41.5 per cent expected the state’s economy to be weaker or slightly weaker over the next 12 months. In March, that figure was 35.1 per cent, and in December, it was just 22 per cent.
Each of these fears translate into falling confidence at a time when businesses are telling us conditions are finally holding up after successive quarters of deterioration. A fall in confidence and a change in the property taxation system is also a blow to the state’s efforts to build our economy, attract new businesses to South Australia and stem the brain drain.
This article was originally published in the South Australian Business Journal on Tuesday 6 August 2019.
Anthony Penney is executive director of industry and government engagement at South Australian Business Chamber.
