FED:Small business not in good shape: ACCI

AAP General News (Australia)
02-15-2011
FED:Small business not in good shape: ACCI

CANBERRA, Feb 15 AAP - Small businesses are suffering and will be further hit by this
summer's natural disasters, a business lobby group says.

The Australian Chamber of Commerce and Industry (ACCI) small business survey found
its index for business condition falling to 42.0 in the December quarter from 44.5 in
the previous three months.

A figure below 50 indicates economic conditions among small businesses are in contraction.

Business expectations fared little better at an index reading of 47.4.

Most index components of the index fell in the quarter, apart from non-wage labour
costs and selling prices.

"The Australian small business sector is actually not in good shape at the moment,"

ACCI director of economics and industry policy Greg Evans told reporters in Canberra on
tuesday.

"It's lost a considerable amount of its economic momentum."

All components were below 50 apart from wage growth and, again, non-wage labour costs.

Mr Evans said it was not just the case of a two-speed economy in terms of the resource
and non-resource sectors, but also a "widening chasm" between large and small businesses.

He was most concerned after the reading for profitability, which fell even further
to a weak 38.2, one of its lowest levels ever.

"It shows the difficulty that small business have in overall retained earnings and
the difficult task they will have in the period ahead in terms of gaining capital for
expansion and future employment," he said.

He said retail, hospitality and manufacturing businesses were particularly under pressure
from rising interest rates and a high Australian dollar.

He again called on governments to take fairly urgent action on tax reform that would
reduce personal income tax and capital gains tax, while there needs to be further effort
in terms of reforming state-based transactions taxes.

"All these taxes add up to less confidence for business, and much more pressure in
terms of profitability in the small business sector," Mr Evans said, also expressing concern
about the impact of recent natural disasters.

"Recent floods and cyclone activity on the eastern seaboard will further dampen small
business confidence over the first half of 2011."

AAP cb/vg

KEYWORD: BUSINESS

� 2011 AAP Information Services Pty Limited (AAP) or its Licensors.