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NSW businesses gloomy on carbon and economy

June 30, 2011

The proposed carbon tax and an uncertain economic outlook have caused business confidence in New South Wales to tumble during the quarter, according to the Sensis® Business Index released today.

 At the same time, small business support for the New South Wales Government has skyrocketed, taking it from the least supported state and territory government to the most popular.

 Report author Ms Christena Singh said the business confidence indicator in New South Wales had fallen dramatically during the quarter.

 “New South Wales has had the nation’s largest fall in business confidence this quarter, more than reversing last quarter’s strong rise.”

 The Sensis® Business Index shows New South Wales small businesses experienced weaker trading conditions during the quarter and were expecting sales and profits to decrease further in the short term.

 Ms Singh explained that New South Wales small businesses not only held pessimistic views about their own business prospects, but also about Australia’s economic outlook.

 “Overall, New South Wales small businesses believe the economy is currently slowing and that it will have deteriorated in a year’s time.”

 In the first survey since the election of the O’Farrell Government, the report shows the new government is enjoying the status as the most popular state or territory government.

 “We have seen a dramatic turnaround in small business support for the New South Wales Government after recording the lowest level of support for 27 of the previous 28 quarters,” Ms Singh said.

 The key reasons small businesses support the New South Wales Government’s policies include perceptions that the government:

·       was new

·       had a better awareness of small business needs

·       Liberal Party traditionally supported small business.

 Given the topical nature of a proposed carbon tax in Australia, the Sensis® Business Index also asked New South Wales small businesses specifically about their views.

 Thirty-eight per cent of New South Wales businesses said they did not understand the proposed carbon tax, while 47 per cent said they partially understood. Fifteen per cent said they had a thorough understanding.

 Fifty-four per cent of New South Wales small businesses said a carbon tax would have a negative impact on their business, while 39 per cent believe it would have no impact. Seven per cent believe it would have a positive impact.

 According to the findings, New South Wales small businesses are most concerned about a carbon tax impacting on costs, with lower consumer demand and the negative impact on the economy also key reasons.

 For those New South Wales businesses that felt the carbon tax would have a negative impact on their business, 10 per cent said they would consider closing or selling their business, while eight per cent would look at decreasing staff, five per cent modifying products and services, four per cent introducing new products and services, and three per cent stopping production of some products or services.

 Key New South Wales findings from the June 2011 Sensis® Business Index:

·         Business confidence fell from 50 to 20 per cent (28 per cent nationally)

·         Profitability dropped from one to negative 12 per cent (negative14 per cent nationally)

·         The sales indicator fell strongly, down 22 percentage points to negative 20 per cent (negative14 per cent nationally)

·         Overall employment by New South Wales small businesses fell during the quarter, taking the indicator from a flat result of zero to negative four per cent (one per cent nationally)

·         Support for the New South Wales Government jumped 67 percentage points taking the indicator to positive 18 per cent.

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