‘Collective roar’ against land tax
When a major issue, or what they perceive is a threat to their operations, arises, businesses’ collective roar can be deafening.
Business owners in South Australia spend a lot of time trying to keep their heads above water and their doors open.
Paying bills, employing staff, making sure the wages are correct and managing products or services — the cogs keep turning, keeping our economy moving.
But when a major issue, or what they perceive is a threat to their operations, arises, their collective roar can be deafening.
Business owners and operators — many of whom also own property or lease commercial space — are making their voices heard regarding the State Budget measure to introduce land-tax aggregation.
The Business SA-William Buck June Quarter Survey of Business Expectations is showing confidence has fallen again, this time hitting levels not seen since late 2017. Confidence has dropped to 84.4 points — down from a high of 116.4 in December 2018. That’s a significant 32-point fall over just two quarters.
December 2017 was the last time the business sector roared with disapproval. Back then it was because they were unhappy with the former Labor Government’s decision to potentially introduce a bank tax in their 2017-18 Budget, which would have been passed on to all account holders and many mum-and-dad investors. We believe the recent fall in confidence can be attributed to the land-tax aggregation issue because national confidence only dipped slightly and general business conditions fell only marginally by 1.8 points.
The real danger now to the state’s economy is the recent dive in confidence, despite overall conditions steadying. We know confidence translates into transactions, which influences business investment, jobs creation and grassroots spending.
The importance of land-tax aggregation cannot be underestimated. Responses to our questions show businesses are expecting a big hit. Many small-business operators are concerned that landlords will pass the increases on, putting pressure on their already tight margins.
Property owners are also telling us they’re considering downsizing, selling and moving interstate. They’re cooling on new acquisitions and putting off further investment. Some businesses are expecting an increase of tens of thousands of dollars of additional land taxes.
Another telling tale is that of those who participated in the survey, 41.5 per cent expected the state’s economy to be weaker or slightly weaker over the next 12 months. In March, that figure was 35.1 per cent, and in December, it was 22 per cent.
Each of these fears translate into falling confidence at a time when businesses are telling us conditions are finally holding up after successive quarters of deterioration. A fall in confidence and a change in the property-taxation system is also a blow to the state’s efforts to build our economy, attract new businesses to SA and stem the brain drain.
Anthony Penney is executive director of industry and government engagement at Business SA.