Western Australian businesses are concerned about their prospects post-COVID-19, with ongoing border closures, weak demand and the upcoming expiry of JobKeeper weighing down longer-term confidence.
According to the WA Super – CCIWA Business Confidence Survey, the only WA-specific snapshot of business sentiment, WA businesses’ longer-term outlook has grown more pessimistic, with two out of three (66%) expecting worse conditions in the year ahead, up 5 percentage points since last quarter.
The State’s earlier than expected easing of restraints and success in containing community spread helped increase short-term confidence by 10 points since last quarter. After confidence plummeted during the worst of the shutdown, WA businesses recovered around 60% of the fall.
But the majority of WA businesses (52%) still expect economic conditions to worsen for the next three months, with 48% expecting conditions to improve or remain the same.
Three in five (60%) businesses report they are suffering under interstate border closures (13% a ‘great’ extent, 21% a ‘moderate’ extent, 26% a ‘slight’ extent). Concerns are prevalent among accommodation and food (95%), wholesale trade (89%) and retail (76%). More than half of mining businesses (55%) and nearly three in five (58%) manufacturers cited the international border closures as damaging their business. Looking to the regions, respondents in the Kimberley were the most likely to report concerns with interstate and international borders (92% and 75% respectively).
Though closed borders have played an important role in containing COVID-19, it is important to understand the impact of restrictions on businesses. Governments must continue to follow health advice in making decisions on our borders, but it is increasingly critical that the preconditions for reopening borders be shared, so that businesses can better plan for the future.
More than two in five (42%) businesses identify weak demand as the biggest barrier to growth in the coming year, with wholesale trade (67%), manufacturers (59%) and professional services (56%) among the most affected.
One third of WA businesses (32%) indicate they are not confident they can survive without JobKeeper in the current economic circumstances. Labour-intensive industries are most concerned, with 50% of businesses in retail and accommodation and food services like cafes and restaurants ‘not confident’ they could continue. Across the regions, concerns about survival were highest for survey respondents in the Kimberley (42%) and South West and Great Southern (41%).
WA Super CEO Fabian Ross said the results highlight how COVID-19 has “turned the economy upside down”.
“The super industry has been hit too, with COVID having had significant negative impacts on equity markets over the last few months. Despite this, WA Super has remained focused on our investment philosophy, which is to protect member savings even when sharemarkets experience a severe downturn. But now as we look ahead, and we move from response to recovery, we need to unite and work collaboratively – from governments, to businesses, to the people of Western Australia. We’re clearly all in this together and although we have a long and unpredictable journey ahead, one commitment remains unchanged for WA Super, and that is to put our members first.”
Reigniting the confidence of businesses to invest will be critical to WA’s economic recovery. Nearly every WA business (98%) favoured a clear plan from government to grow the economy as the best way to boost confidence. To this end, the biggest priority is creating a more competitive tax system.
Read the full WA Super – CCIWA Business Confidence Survey report.
Aaron Morey
CCIWA Chief Economist
