The latest SME Growth Index prepared by non-bank lender ScotPac reveals that the rise in wages and compliance costs have contributed to the cashflow pressures facing Australian SMEs, most especially those based in New South Wales.
Asked to name the top three areas of rising business costs today, 67 per cent of SMEs in NSW nominated higher wages, compared to 61 per cent for the rest of the country. Compliance costs were the next highest rated by NSW SMEs at 60 per cent compared to 53 per cent for other markets. Transport and logistics expenditure rounded out the top three areas of cost rises across the nation, 49.5 per cent among NSW SMEs and 51 per cent for SMEs in the rest of the country.
To address these problems, the report noted that SMEs, particularly in NSW, are adopting some key strategies. In particular, 62 per cent of NSW SMEs were reducing their headcount, compared with 52 per cent in the rest of the market; 59 per cent of NSW SMEs were increasing their operating hours, compared with 54 per cent across the rest of the country; and 34 per cent of NSW SMEs plan to downsize of reduce sales volumes, compared to 41 per cent in the rest of the country.
ScotPac CEO, Jon Sutton commented that the findings provided a clear picture of the challenges SMEs are facing to whichever party forms the government in NSW after the March 25 election.
“SMEs account for 98 per cent of all businesses across Australia and, as our largest State, NSW SMEs are the engine room of our national economy,” Sutton said. “As wages rise, SMEs are feeling the pinch and taking action to reduce their operating costs, particularly in NSW where cost-of-living pressures are the most acute in the nation.
“There is a golden opportunity for the next NSW Government to take a razor to the red tape and bring down compliance costs for hundreds of thousands of SMEs,” Sutton added. “With targeted policies that cut the cost of doing business, further job losses can be stemmed, and NSW SMEs can remain competitive with their interstate counterparts.”
