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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-09-09 Daily Xml
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BANKSA STATE MONITOR

The Hon. CARMEL ZOLLO (15:12): My question is to the Minister for Small Business. Will the minister provide an overview of the current outlook for South Australian businesses following the release of quarterly business surveys such as the BankSA state monitor?

Members interjecting:

The Hon. CARMEL ZOLLO: Clearly, they don't want to hear what the minister has to say following the tremendous success in relation to mineral exploration.

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (15:12): I thank the honourable member for her question.

The Hon. R.I. Lucas: It's in the ministerial statement tabled in this council. Why not just give her a copy of the ministerial statement? Can't she read?

The Hon. P. HOLLOWAY: What I do know is that many members opposite don't listen. Although it is probably futile trying to repeat it, sometimes there is just a chance that the facts might actually sink in.

The BankSA state monitor is based on a survey of 300 consumers and 300 businesses across South Australia. Bank SA released its latest state monitor publication on 27 August. The August survey was conducted between 4 August and 8 August immediately following the Reserve Bank of Australia's decision on 4 August to leave official interest rates unchanged.

The August state monitor found that business confidence rose sharply in August 2009 from 113.4 points in May 2009 to 123.2 points, showing an increase of 9.8 points. This follows on from a 17.1 point increase between February and May this year lifting business confidence to levels that were recorded during the boom years of 2003 to 2005. These increases come after a decline in business confidence since May 2007.

Rural business sentiment, which rose sharply in the previous survey, has again also recorded a significant increase. It is now at 121.7 index points, up from 107 points in the May survey. The manufacturing and agriculture sectors recorded the strongest lifts in confidence, with confidence in the manufacturing sector increasing 28.3 per cent and confidence in the agriculture sector up 22 per cent, which is particularly pleasing given the difficult seasonal conditions we have faced over a number of years in sequence now. The state monitor has revealed the following statistics:

68 per cent of businesses are confident that conditions will improve in the next year, and 66 per cent are confident that their own business conditions will improve;

while half of businesses surveyed experienced a decline in turnover in the past three months, 76 per cent remain positive about their business situation;

the number of businesses employing staff in the quarter has fallen, but 30 per cent expect to increase staff numbers or hours in the coming three months;

29 per cent of businesses took on staff or increased hours; and

38 per cent of businesses are likely to make a major purchase in the next 12 months.

Factors lifting business confidence include stable and low unemployment, positive media reports on the national and world economy, the share market, housing and retail markets, and car and housing sales. Bank SA's managing director Rob Chapman said:

Business owners are confident about the economic outlook and are expecting to see immediate benefits for their own business. [However] despite the upbeat assessment, businesses remain cautious about making major investments in capital or staff. These worries are likely to disappear if we see a period of sustained economic growth and a return in consumer spending.

Several other quarterly business surveys have recorded a similar positive outlook. The Sensis Business Index survey for the quarter to June 2009 recorded a sharp increase in business confidence in South Australia's small and medium enterprises (SMEs). Nationally, business confidence also rose sharply.

The National Australia Bank's SME survey for the June quarter found that the profitability outlook for small businesses turned positive for the first time since September 2008. The report suggested that the start of improving economic conditions could be in sight; in addition, the NAB survey found that, whilst it remained tough for many SMEs across the country, there was a slight improvement in business conditions after a number of quarters of decline. SMEs in South Australia and Western Australia recorded the best business conditions closely followed by New South Wales, all performing above the national average. The Hudson Report, which involves a survey of 455 South Australian employers, revealed that in the June quarter employer confidence in South Australia was the second highest nationally, well above the national average.

CB Richard Ellis's most recent quarterly report states that most of the new tenant demand across Adelaide is for small tenancies which have a fit-out in place. This is due to capital for fit-out becoming increasingly difficult to raise. Vacancies across the Adelaide market have hit an all-time low of 3.3 per cent as at January 2009, and this is the result of limited new supply coupled with a strong growth in the South Australian economy, resulting in strong demand for office space.

Saville Adelaide's most recent report also indicates that commercial vacancies are limited in Adelaide. The vacancy rate of 3.3 per cent in January 2009 is down from 3.7 per cent in July 2008, and this is due to new supply coming onto the market in late 2008 being absorbed. Saville's research also found that annual absorption recorded in the year to January 2009 was 74,313 square metres, significantly higher than the 10 year average of 25,710 square metres. Approximately 42,000 square metres of office stock is due for completion in the second half of 2009, and 11,500 square metres has been precommitted. This represents 27 per cent of office stock due. So, as you can see, business confidence in South Australia rose sharply in August.

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