Political doubts spook business

Stephen McMahon
April 29, 2013
News Limited Network

MANUFACTURERS, small business operators and builders have shut-up shop and stopped hiring with growth flatlining amid growing concerns about the budget deficit and political uncertainty ahead of September election.

The nation’s leading employer group – The Australian Chamber of Commerce and Industry – said the small business sector has put expansion plans on ice as they face difficulty getting loans and are increasingly reluctant to hire full-time staff.

Business are deeply concerned about the future with the most recent forecasts showing the budget deficit could blow out from an expected $11.6 billion this year to $14.3 billion by 2016-17.
A report commissioned by the Minerals Council of Australia warns the nation’s budget structures need to be overhauled with at least $15 billion to be axed from current spending plans over the coming four year period.

The top-end of town however, is growing increasing confident the worst may be over with the latest bi-annual Ernst &Young report showing almost 90 per cent of respondents believe the local and global economies are stable or improving.

This more optimistic outlook is expected to pave the way for an increase in takeover deals and public listings over the coming 12 months.

And the report expects corporate confidence to move up another notch after the Federal election in September as a definitive result will remove another layer of uncertainty.

But ACCI chief economist Greg Evans said the uncertainty about the federal election outcome has the small business community worried with firms still doing it tough despite the small cracks of light in recent months in terms of the retail and housing sectors.

“We are continuing to see flat levels of business investment outside of the mining sector,” he said.

“And there is no doubt the political uncertainty ahead of the Federal election and concerns about the budget deficit, carbon tax and unfunded spending plans such as the Gonski education reforms and NDIS are only adding to the problem.”

Mr Evans said the evidence from the business sector shows that confidence remains “shaky” and ACCI members are in a period of hibernation where they are deferring investment and not taking out new loans.

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