CCIWA Chief Economist
The soaring cost of doing business is now the number one barrier to growth in WA. Yet business confidence is holding firm, amid signs that labour shortages have finally reached their peak.
For the first time on record, CCIWA’s quarterly Business Confidence Survey shows rising operating costs have eclipsed all other factors impeding WA businesses, cited by three in four (75%) respondents. Labour costs are rising for four in five WA businesses (81%), and while workforce and skills gaps remain acute, reported by 75% of businesses, this is the lowest reading since the onset of the pandemic, a sign the shortages have peaked.
The latest survey shows one in six WA businesses has been put at risk by rising interest rates. Repayments now either equal or exceed turnover of 15% of respondents, even higher among the healthcare and social assistance (38%), food services (22%) and retail (22%) sectors.
In this edition, CCIWA surveyed how businesses are responding to these higher costs, with three in four respondents (71%) reporting they had no choice but to pass on higher prices to the consumer. One in every three WA businesses had to draw down on their own savings (30%), while other respondents delayed prospective (14%) and existing (9%) projects, avoided tending for new work (11%), or laid off staff (12%), a loss for the economy.
The WA economy compares well with others nationally and globally, however the mounting pressures make WA’s high tax on jobs, especially on medium-sized businesses, hard to justify. CCIWA encourages the State Government to use it’s strong financial position to provide modest but impactful relief, by introducing a $1.3m threshold and a rebate for businesses up to $7.5m.
The full business confidence report is available to CCIWA members