The rising cost of doing business in WA is the biggest risk factor for businesses closing or downsizing in 2024, CCIWA’s latest Business Confidence report has revealed.
The March quarter survey found almost one in five businesses (18%) said they were at risk of closing or significantly scaling back their operations this year.
Of those, 84% said the rising cost of doing business was a key driving factor, followed by declining customer demand (40%) and red and green tape (25%).
Businesses most at risk of closure were in the food and accommodation, agriculture and arts and recreation sectors, while those most at risk of downsizing were in the agriculture, real estate and transport industries.
CCIWA Chief Economist, Aaron Morey, says the cost-of-business crisis is taking its toll.
“Just as households have been doing it tough with rising costs, so too have businesses,” he says.
“That pressure has been building over the past 12-18 months and we’re seeing it really take a toll on small and family businesses.
“There’s not much the State Government can do to bring down soaring costs but one way they could ease the pressure is by reforming WA’s unfair payroll tax system.”
FIND OUT MORE: CCIWA’s payroll tax campaign
Skilled shortages continue
The survey also found:
- Cost pressures remain a key challenge for all businesses, with 71% of those surveyed reporting it as a barrier to growth, down four percentage points since December.
- 68% said the availability of skilled labour was a barrier – also down four percentage points.
- Almost two thirds (65%) reported they had struggled to hire for a particular skillset over the quarter.
- Skills shortages were most impacting businesses in the transport (79%), healthcare and social assistance (76%) and manufacturing (74%) sectors.
Despite the challenges, WA businesses remained optimistic about the short-term and longer-term economic outlook compared with the previous survey in December.
Just over a quarter of businesses surveyed (26%) said they expected conditions to improve in the next 12 months, up five percentage points.
Morey said the overall strength of WA’s economy was giving businesses the confidence to invest in digital expansion, with almost half of those surveyed (45%) indicating they plan to increase their digital presence in the upcoming year.
“This likely reflects the need for most businesses to remain competitive in an online environment,” he said.
CCIWA’s Economic reports, including Business Confidence, are available exclusively to CCIWA Complete, Advantage and Corporate Members. For more see CCIWA’s Economic Insight page.
