Australian small businesses experienced slow growth in 2018 and their business confidence in 2019 is at its lowest point since 2011 – lower than small businesses in Indonesia, Vietnam and the Philippines, according to new survey data from CPA Australia.
The findings from CPA Australia’s 10th annual Asia-Pacific Small Business Survey follow extensive surveying of more than 3,600 small business operators in ten markets, including Australia, Hong Kong, Mainland China, Singapore, Malaysia and Vietnam. The survey is a measure of business confidence, hiring intentions, innovation and adoption of technology and social media usage.
CPA Australia’s Head of External Affairs Paul Drum says the survey data from Australian small businesses is cause for concern, especially when considered in conjunction with the Reserve Bank’s latest assessment of domestic economic conditions.
“Only 34.7 per cent of respondents are confident in the growth prospects of Australia’s economy in 2019, while small businesses in Indonesia, the Philippines and Vietnam are more than twice as likely to expect their local economies to grow this year. Only small businesses from Hong Kong have a lower level of confidence in their local economy.
“The minutes of the latest meeting of the Reserve Bank of Australia provides the economic context behind this falling confidence. The RBA observed that growth in Australia “had slowed markedly in the second half of 2018 compared with the first half”. The RBA’s concerns are not limited to the local economy, with the minutes also highlighting the slower pace of global economic activity had continued in recent months.
“On the key measures of innovation, e-commerce, social media use and exports – which the survey shows are all drivers of business growth – Australian small businesses continue to show weak performance, and lag behind their competitors in Asia, with relatively few small businesses undertaking these activities and investments.
“These findings are not really surprising to us as when it comes to innovation in Australia, as the survey results do not vary significantly from one year to the next. When applied at the coalface of small business, we are being outperformed on innovation by a significant margin by our competitors in Asia.
“While there are some very innovative small businesses in Australia, they are the exception rather than the rule. Australia’s small businesses are slow to take up technology and are significantly less likely to use social media for business purposes and earn revenue from online sales.
“Of further concern is the fact that 40 per cent of Australian small business respondents stated that they made no investment in technology in the last 12 months.
“It should also be noted that in Malaysia, where small businesses are innovating and focused on e-commerce and technology – all drivers of economic growth – small business confidence is at its highest since 2011, in direct contrast to Australia.
“For policymakers and others seeking to promote stronger growth in Australia’s small business sector, improving the digital capability of small business is a must. With many Australian small businesses having no employees or less than five employees, professional advisers such as accountants will also play a critical role in building capability,” Drum says.
“With the federal election campaign now in full swing it would be most encouraging if we saw some election promises that proposed government assistance for Australian small businesses that helped them better embrace technology and help them build their digital capabilities,” Drum said.
“The future federal government must also factor the overall low business confidence reflected in these survey results into their policymaking decisions and policy implementation,” he said.
