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Business confidence divided across region: Hawes

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The latest Business Conditions Survey reveals a large divide in business confidence across the region, says the Hunter’s peak industry body.

Newcastle and Lake Macquarie were among the highest in the state, while the Hunter Valley was deemed the lowest.

And, even though business confidence has improved across both areas, it remains firmly in negative territory, with employers concerned about cash-strapped customers.

In fact, their top three cost fears were insurance, taxes and energy.

Hawes
Business Hunter CEO Bob Hawes.

Business Hunter CEO Bob Hawes said the pause on interest rates had given businesses hope that tough headwinds were easing.

“While parts of the region’s economy have been unaffected by cost-of-living pressures and are doing well, other businesses, particularly SMEs and those operating in retail, hospitality and tourism have been hit hard,” he explained.

“In the Hunter Valley, where accommodation, food services and tourism are major economic drivers, reduced consumer spending power is taking a toll.

“Interest rate increases have an almost immediate impact on customer behaviour.

“This rise in business confidence is a positive sign, however we remain cautious.”

The owner of General Organic, a small family distillery located in Beresfield, Lina Bryukhova said the cost of doing business had increased sharply and unpredictably over the past two years.

“The price of ingredients such as locally-sourced wheat and sugar, energy, freight and packaging has increased dramatically,” she stated.

“Passing those costs on to consumers will negatively impact our sales, so we have little choice but to absorb them.”

Ms Bryukhova said high business costs were directly preventing her business from expanding or hiring staff.

“The alcohol excise in Australia is the third highest in the world and import duty on equipment we’ve had to source from Russia is 40%, compared with 5% on products from any other country,” she added.

“This is a huge burden on our business.”

Over the last quarter, more than 60% of Hunter region businesses observed reduced demand for products and services, which was slightly higher than the state average.

Sixty per cent of them reported a reduction in order quantities and nearly 70% recounted a reduction in purchasing frequency.

More than 50% observed an increase in price negotiation and requests for lower cost substitutes.

“To improve the ease of doing business, survey respondents consider taxes, levies and government charges as the area that requires top priority attention from government,” Mr Hawes said.

Discretionary spending was down on the previous year across all 15 categories.

More than 50% decreased their donations to charity, over 30% dropped their investment in energy saving initiatives and more than 20% reduced their investment in cyber security.

Employee upskilling, benefits and wellbeing initiatives also declined substantially. 

“This is not an unusual response given the uncertain and challenging operating conditions,” Mr Hawes said.

“But, any prolonged reduction of spending in these categories has the ability to impact business progress and future success.”

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