South Australia’s business confidence and conditions are on an upward trajectory, according to the third-quarter results of the South Australian Business Chamber and William Buck’s Survey of Business Expectations. This is a positive development, especially as interest rates rise and inflation peaks.
Although 84% of businesses report interest rate rises affecting their sales revenue and 67% say they are impacting their investment decisions, South Australian businesses remain confident, sitting above national confidence levels.
This continued optimism reflects ongoing determination and trust in the state’s capabilities. Recent major events, such as the biggest-ever Fringe Festival, LIV Golf, and the AFL Gather Round have positively impacted business, through an influx of interstate and international tourists, boosting hospitality and retail spending.
Naturally, when large numbers of tourists come to town, some will be businesspeople. Although their visits may be largely for leisure, seeing South Australia and its expertise hosting such large events encourages investment and migration.
Although we see a marginal improvement in labour shortages this quarter, workforce availability remains a significant issue with 55% of businesses reporting issues, compared to 58 per cent last quarter. The top reasons given for difficulty finding staff are a lack of suitably skilled workers and lack of applicants for positions. Interestingly, we have seen an increased number of businesses who could not afford market wage rates. Businesses are also saying a lack of local housing is a contributing factor of the skills shortage.
A long-term solution to labour shortages would be to drive continued population growth. For a long time now, I have been an advocate for an increased emphasis on growing our state’s headcount, crying out for Governments to prioritise migration efficiencies and incentives to ensure South Australia follows a positive population trajectory.
This quarter, 61% of businesses saw the benefits of an increased population when asked their thoughts on the issue. A larger state population would give businesses greater market size and greater access to labour.
I appreciate some have concerns about the matter. When asked, some businesses responded with the fear an increased population may cause additional stress on housing ability, infrastructure, and the environment. These concerns are valid, but nothing that cannot be addressed as part of a measured and well-planned growth strategy.
Despite these challenges, I remain optimistic about business in South Australia. Inflationary pressures will continue to pinch, particularly for those dealing in discretionary consumer spend markets, however, businesses in South Australia have survived tougher times and will continue to do so.
