Small business owners are losing faith in Malcolm Turnbull as some sectors face tough times

All eyes are on the government as it prepares to hand down the 2017 federal budget, but Prime Minister Malcolm Turnbull and his party might be running out of time to convince small business owners they can enact policies that will sustain growth.

The most recent Sensis Business Index Survey has revealed support for the Coalition among small and medium businesses has fallen into negative territory, with only 14% of SME owners feeling supported by the government’s policies. Meanwhile, 16% of businesses surveyed say they do not feel supported by the government’s approach to their sectors.

The “net balance” of the index, which is calculated by looking at the difference between those that feel supported and unsupported by the government, is now -2, and is at its lowest level since Malcolm Turnbull became Prime Minister.

There’s also a split between how small business owners view the overall economic conditions, and their opportunities for growth, and how they view the government’s capabilities.

Sensis chief executive officer John Allan said in a statement the 1000 SME operators from across Australia surveyed for the index believe economic conditions are strong, but “less than one in seven businesses have faith in the Government’s policies, with the biggest concerns being excessive bureaucracy and red tape, as well as there being too much of a focus on the interests of big business”.

Read more: Federal budget tipped to include measures to tackle Australia’s $21 billion “black economy”

The government battled hard in the first part of the year to secure business-focused policies, including cuts to the corporate tax rate for businesses turning over up to 10 million, but small business groups continue to lobby for other changes, including an extension of the $20,000 instant asset tax write off, which is due to expire in the new financial year, and easier access to startup capital.

While indications are that support for the government might be slipping, other small business surveys show business owners understand that in turbulent conditions, they hold the key to their own fates

The Commonwealth Bank’s Small Business Barometer, released today, highlights that one in two of the 857 businesses it surveyed anticipates growth over the next year, but the business sentiment index for small operators turning over less than $1 million a year dropped nine points compared with the last barometer survey.

The CBA suggests that while businesses with an “early adopter” mindset are more likely to have faith business conditions will improve throughout the year, cashflow remains an issue that is stifling growth.

Eighteen percent of businesses surveyed by the bank said they experienced cashflow concerns “on a regular basis”, while 42% of business owners said they had opted not to pay themselves at least once in the past 12 months to address a cashflow issue.

Source: Sensis

Conditions improve across the board, but worries remain

The National Australia Bank’s quarterly SME Business Survey, also released this week, revealed business confidence had improved across all SME categories surveyed, but there are still areas of concern that are out of everyone’s control.

“We do expect some hit to business confidence and conditions in Queensland in coming quarters,” said NAB’s chief economist Alan Oster, reflecting on the lingering effects of Cyclone Debbie, which has not yet been taken into account in business surveys.

“The imminent closure of the Holden car manufacturing plant in Elizabeth north of Adelaide might have also impacted on small business conditions and confidence in South Australia, which were both negative in the quarter,” he said in a statement.

As industry groups lobby the government in pre-budget submissions, other sector-specific worries are also emerging.

The Australian Retailers Association (ARA) has pointed to a retail skills shortage in its pre-budget submission to Treasury, highlighting a need for better vocational education support for students in retail courses if Australian businesses are to stay competitive.

In the ARA’s submission, executive director Russell Zimmerman calls on the government to “take greater leadership of vocational training in schools by increasing the dialogue and engagement between schools and industry, and focus on improving the quality and significant inefficiencies created by poor pathways between VET qualifications”.

However, according to analysis from Sensis, retail is one of the few sectors where a majority of operators are optimistic about the future.

When looking on a sector-by-sector basis, it found those in the finance, communications, culture and recreation, hospitality, wholesale trade, transport and storage and manufacturing sectors all had less confidence in the future than they did at the time of the last survey.

“We saw big declines in confidence in the manufacturing and hospitality sectors this quarter driven by poor sales results, with manufacturing really struggling compared to the other industries,” John Allan said.

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