Australia small businesses face mounting cost pressures and regulatory changes

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Australia small business pressures

Highlights

Small businesses face increased compliance costs from payday super, surcharge bans, wage rises, and trust tax reforms amid ongoing inflation and weak payment discipline.
CreditorWatch reports serious arrears at an 8.5-year high in September, with over half of invoices unpaid on time and 60-day overdue rates at their highest since April 2018.
MYOB survey shows 38% of small businesses saw revenue decline year-on-year, while 65% are concerned about cashflow and 69% about attracting customers amid rising borrowing and fuel costs.

Cashflow strain builds amid policy changes

As reported by ABC News, small business operators are contending with a combination of economic pressure and new regulatory requirements, including payday super, a ban on debit and credit surcharges, higher minimum and award wages, and reforms to trust taxation.

Industry groups say the combined effect is raising compliance costs at a time when firms are already dealing with inflation and weak payment discipline. Builder Steve Bright says his business is spending more than half its time on office paperwork rather than construction work, and he has hired extra staff to manage the additional requirements.

Simon Croft of the Housing Industry Association says reforms are often assessed in isolation, even though businesses experience them all at once in day-to-day operations. Sunshine Coast designer and planner Debbie Johnson says the tougher environment has made her reconsider plans to pass her business to her son after a difficult year.

The pressure is also showing up in payments data. CreditorWatch says serious arrears reached an 8.5-year high in September, with more than half of invoices not paid on time and the share of invoices more than 60 days overdue at its highest level since April 2018.

Rates, fuel and demand weigh on outlook

Small businesses are also bracing for the Reserve Bank's next rates decision, with markets increasingly expecting another increase in borrowing costs. Higher fuel and transport expenses are adding to the burden, and Westpac chief economist Luci Ellis says these costs are a major factor squeezing both small businesses and the wider economy.

Some of those costs are being passed on to customers. Ellis says there are cases, particularly among cafes, where prices appear to have risen by more than the value of the surcharge ban alone, highlighting how businesses are trying to protect already thin margins.

A MYOB survey finds 38 per cent of small businesses have seen revenue fall from a year earlier, while 65 per cent are concerned about cashflow in the coming year and 69 per cent are worried about attracting new customers. Xero's Charlie Sheppeard says sectors such as retail and hospitality are finding it especially hard to absorb extra costs because card payments are common and margins are already narrow.

Small Business Minister Anne Aly says the government recognises the pressure on operators and points to tax relief measures including the permanent $20,000 instant asset write-off. She also cites payment reforms that the Reserve Bank says will lower business costs by $910 million a year.

In our earlier article on Menara Asia’s Menarabena platform, we covered how Malaysia’s construction sector is turning to digitalisation to streamline procurement and improve access to certification, documentation and compliance information. We also noted that the initiative aims to help contractors and SMEs navigate product standards and approvals more efficiently without replacing existing regulatory requirements.

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