4 March 2024

Business outlook 'isn't fantastic' with the ACT standing alone in reporting a fall in investment

| Claire Fenwicke
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Aerial view of Canberra city and Parliament House

The ACT was the only jurisdiction to report a drop in business investment in the financial year to June 2023. Photo: James Coleman.

The Canberra Business Chamber has warned more needs to be done to make it attractive to do business in the ACT as new numbers show a concerning drop in investment by the sector.

But the ACT Government has insisted the numbers instead reflect the higher standard of living in the Territory and its “strong fiscal position”.

The latest State Statistical Bulletin figures from the Parliamentary Library showed business investment fell in the ACT by 9.5 per cent in the 2022/23 financial year – the only jurisdiction to report a negative result.

The next lowest jurisdiction was Tasmania with 0.7 per cent growth in business investment in the same period.

Business investment is the amount of money put in to projects, growth and expenses by the private sector.

Canberra Business Chamber CEO Greg Harford said the numbers were concerning.

“The message from our members is that things are tight, business has slowed right down and business is not investing as much as it might have previously,” he said.

Given the ACT is a small market, the movement by some of the larger business players can have quite an impact on the numbers.

The economy has been challenging due to higher interest rates driving down consumer spending and business investment.

A drop in other areas in the ACT can also impact business, including a 37.6 per cent decrease in the number of dwelling approvals and 17.7 per cent fall in lending for the construction of owner-occupied housing.

The Federal Government’s shift away from using consultants is also a factor, given the higher number of consultancy firms based in Canberra.

But Mr Harford said there were still ACT-specific barriers impeding business investment and growth.

“There is the perception business is more costly [in Canberra], that it’s harder to get things done, and also the market is very small,” he said.

“Larger national players can choose not to set up in Canberra because it doesn’t stack up, things like payroll tax do have an impact … as it incentivises [businesses] not to grow.”

Mr Harford also pointed to workers compensation insurance and inconsistencies of ACT policy with other jurisdictions as barriers.

“We need to change the compliance mindset in government … we think culture change is required,” he said.

“Look at the policy settings that are in place, reduce the red tape and bureaucracy … adopt an approach more focussed on business outcomes and getting on with the job.

“The outlook [for business] isn’t fantastic.”

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Shadow Business Minister Leanne Castley said the latest numbers showed the sector had “no confidence” in the current government’s ability to support a business-friendly environment.

“While business investment can fluctuate, to be so far removed and such an outlier from any other jurisdiction indicates that the business sector is clearly not confident in investing in Canberra and is avoiding the ACT,” she said.

“The ACT Labor-Greens government claims to be business friendly but treats business as a milk cow to fund its big spending.”

She said businesses were facing other costs they couldn’t just absorb, such as rising input costs, workforce shortages and supply chains.

“It is also concerning that in the increased inflationary environment, the fall of 9.5 per cent is even greater in real terms and as for the likely impact of these terrible numbers,” Ms Castley said.

“As a leading indicator, this shocking business investment number will no doubt contribute to the deteriorating budgetary position that the ACT finds itself in, led by a reckless Labor-Greens government.”

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An ACT Government spokesperson pointed to other statistics in the report which reflected positive results for the Territory, including gross state product’s growth by 4.3 per cent, 2.4 per cent per capita.

Labour productivity is third behind the “mining states” of WA and NT with a drop of 0.9 per cent, and the unemployment rate was 3.9 per cent in January.

“The ACT is the fastest growing economy in Australia, with 33 years of consecutive economic growth,” the spokesperson said.

“This data shows over the past five years the ACT has had average annual business investment of $3.2 billion, with a substantial increase between 2021 and 2022 of 21.3 per cent.

“We have also seen the highest business growth in Australia, with 21.2 per cent growth from July 2019 to June 2023, well above the national average of 14.1 per cent.”

The spokesperson also pointed to a range of incentives for businesses, including no insurance duty, no commercial land tax, no stamp duty for commercial property sales under $1.8 million, the highest payroll tax threshold in the country, lower costs for A and B-grade office space when comparing eastern Australia state capital cities, and the lowest average gross face rents on the eastern seaboard.

“The ACT is open for investment and has a range of incentives and attributes that make investing in Canberra a straightforward and rewarding experience,” the spokesperson said.

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Canberra is a very expensive place to run a business.

Business statistics and claims by the ACT government representative DO NOT take into account the broader impacts of Canberra being the seat of government.

Many of the new businesses that have an ACT based ‘administrative address’ are not primarily operational businesses in the ACT and they wouldn’t be connected to the ACT if we weren’t the Federal seat of government.

The ACT government representative needs to open their eyes to the on the ground business issues of our city and not just base their views on self selected statistical figures or loose business policy connections.

Things are not going well for small business, and I’m sure the monopoly capitalists behind Mega Corp don’t mind a bit.

In fact, it was John D. Rockefeller who said that competition is a sin, and notice how that sentiment, through his descendants, is going well – and all the more the worse things get for everyone else.

Things like climate change and COVID are/were like a godsend to these vultures, along with governments and people who are especially Left – today’s greed being the trick of combining monopoly capitalism with socialism, giving said capitalists ownership of everything while appearing community minded.

The old wolf in sheep’s clothing number.

Gee do you think! One mates rates went up from 18k per annum to over 60k per annum essentially overnight a few years ago. Land tax has gone through the roof and clowns like Rattenbury prevent you from increasing rents by more than CPI but they can increase rates and land tax by far more. This year my land tax increased by 18.1% and rates by 12%. Over the last 5 years my land tax has increased by 255.3%. And they’re scratching their heads wondering why no one wants to do business here. Hmm that’s a tough one.

It’s a classic example of not understanding business and not being held accountable for the wasted finances so they’ll just increase everything to cover their incompetence.

Nka “Nidakas” Asd12:04 pm 05 Mar 24

Does not take much to know that Canberra isn’t attractive to business perhaps with the exception of essential services. Over regulation, the same govt for 20+ yrs that gets away with just about anything, no game-changing vision election after election, incompetent ACT public service, high service, rental, construction etc costs, multiple income families too comfortable to challenge a lazy government…… and the list goes on. The sad part is that everyone talks about local community here but it is all artificial. People who smile at each other at festivals in the city but don’t want to know their neighbours. Artificial city, artificial government, snobbish bureaucrats.

Well said “Nidakas”.

David Watson3:13 pm 05 Mar 24

Hit the nail on the head.

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