Regions squeezed by rising costs, skills shortages

Just one in 10 regional businesses have seen their profits lift in WA in the September quarter, with rising costs and skills shortages squeezing businesses. 

CCIWA’s latest Regional Pulse Report shows sentiment among regional businesses has darkened in comparison to businesses in the city, as overall confidence declined.

Geraldton’s coastline.

Two in five (41 per cent) of regional businesses believe the economy will improve in the next three months, down 6 points. This compares to 44 per cent among metro businesses.  

READ THE REGIONAL PULSE REPORT   

In the longer term, expectations of a weakening economy grew by five points (39 per cent), with these fears most widespread in the Great Southern (55 per cent) and South West (43 per cent).   

Across the regions, just one in five businesses expect better conditions over the coming year.  

However, the persistent strength of the resources sector sees mining regions like the Pilbara (46 per cent) and Goldfields-Esperance (48 per cent) retain their brighter outlook.  

The survey found only one in 10 regional businesses saw improved profits this quarter, while three in five (59 per cent) saw their profits decrease instead, up five points.  

CCIWA Chief Economist Aaron Morey said higher costs and WA’s skills crisis remained the biggest impediments to regional businesses.  

“Concern about rising operating costs remain acute across all regions, impacting four out of five businesses, especially the Mid-West/Gascoyne and the South West,” he said. 

The report also found: 

  • Four out of five regional businesses (82 per cent) reported being impacted by WA’s skills crisis; 
  • A similar proportion faced rising labour costs including wages this quarter (85%), up five points; 
  • Further increases are expected in the South West (89 per cent), Wheatbelt (88 per cent) and Pilbara (85 per cent) regions — higher than the Perth metro area (74 per cent).  

“Regional businesses are under strain to meet demands for higher wages while their profits decline,” Morey said. 

“The best way for the State Government to provide relief would be to ease the burden of payroll tax, which would also improve our competitiveness with other States. 

“CCIWA also encourages the Commonwealth to make it easier to bring in skilled workers from overseas.” 

CCIWA’s Economic reports, including Business Confidence, are available exclusively to CCIWA Advantage and Corporate Members. For more see CCIWA’s Economic Insight page.   

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