Western Australian business confidence growth has hit shaky ground as the WA economy continues to find its feet following the end of the resources construction boom.
The latest WA Super–CCI Survey of Business Confidence conducted by WA’s peak business body, the Chamber of Commerce and Industry WA (CCI), is the only WA-specific index in the country, providing a snapshot of state-wide economic conditions and business expectations.
CCI Chief Economist Rick Newnham said 45 per cent of WA businesses are expecting the economy to weaken this quarter while business investment continues to fall, albeit at a slower rate than previously.
“The expectation from business is short-term pain followed by longer term gain. More businesses (45%) expect the economy to be weaker in the next quarter than expect it to be stronger (16%),” Mr Newnham said.
“Businesses are more optimistic about the future with most (86%) expecting the WA economy to improve or stay the same in the next 12-months. This is however down six per cent since the last quarter.
“This decline in confidence isn’t all doom and gloom, with confidence remaining above its ten-year average, but it is a sign that we cannot take growth for granted, especially when we compete on the international stage.
“Mining businesses are leading the growth in confidence in the WA economy, with every business surveyed in the mining sector expecting stronger economic conditions for the year ahead.
“Businesses in manufacturing (69%) and professional services (64%) also remain confident about WA’s long-term economic trajectory, however businesses in retail are continuing to struggle, with 21 per cent of retailers expecting economic conditions to worsen following low growth in retail sales across WA.”
The WA Super – CCI Employment Index is showing continued signs of recovery and prospects for investment growth in WA remain promising.
“Twenty-eight per cent (28%) of businesses reported increasing their employment levels this quarter, while almost half (49%) kept staff levels steady. These conditions are expected to continue to improve next quarter, with four out of five businesses anticipating increases or no staff changes,” Mr Newnham said.
“For WA’s pipeline of works to increase and flow through the WA economy to workers, WA businesses must be supported to invest. Australia’s company tax rate for larger businesses is no longer globally competitive which means we risk missing out on international investment.
““SMEs in WA would be able to investment more, employ more people and put up wages if the company tax cuts were extended to larger businesses because one in two SMEs depend on the success of those businesses for their own survival.
“A recent business survey conducted by CCI revealed that cutting the company tax rate for larger businesses is more important to WA SMEs than infrastructure funding, lower energy prices or a reliable NBN service.
“Seventy-two per cent (72%) of WA SMEs believe Australia would be more internationally competitive when attracting investment if the company tax rate for larger businesses was reduced, and 71 per cent believe larger businesses would be more likely to increase local investment.”
WA Super Chief Executive Officer Fabian Ross said whilst headwinds coming from national and international pressures are contributing to the survey results in the short-term, we are pleased to see that longer-term data suggests many industries are trending upwards.
“These are reassuring results for Western Australian businesses and the economy,” Mr Ross said.