The 2014/15 financial year in review: ‘Rebalancing act’ as economy shifts gears

A continued shift away from a mining dominated economy has characterised the past year for small to medium sized businesses, economists say.

Shift towards non-mining sectors

HSBC economist Paul Bloxham told SmartCompany the past year had been characterised by a shift towards non-mining sectors.

“We think Australia’s rebalancing act is still under way,” he says.

“Growth is shifting from mining investment to non-mining sectors of economy.

“It’s slow, taking time, slower than expected. But it is under way.”

There’s been a pick-up in household demand, with construction at high levels, while the budget this year and an emerging shift towards growth in the service sector had been somewhat more helpful for small businesses.

This reflects a report published earlier this year by PWC which predicted the end of the Australian mining boom and a lack of investment in other areas will cause the Australian economy to drop 10 places in world rankings by the middle of the century, dropping from its current rank of 19 to 29.

 “The broader narrative is the shift away from mining sector to service sector should favour small businesses,” Bloxham says.

“Some signs already happening, strongest growth in employment in services industry.

“Next year the service’s sector will continue to be key drivers in Australia’s balancing act.”

Signs of improvement

NAB economist Alan Oster told SmartCompany he agreed the past economic year had been about mining versus non mining sectors.

Oster says a lot of SMEs are still doing it tough, while acknowledging the last few months there had been “signs of improvement” to do with rate cuts, a better budget and lower currency.

“There’s a lot of sentiment out there which is uncertain,” he says.

Council of Small Business of Australia chief executive Peter Strong told SmartCompany different small business sectors had faced different challenges in the past year.

Strong thinks retail faced constant change in the past year, where it seemed success was about maintain a bricks and mortar and online as well. 

The budget turning point

Strong says the budget was the biggest event for small business in the past year.

This year’s budget revealed the biggest small business package in Australia’s history with the government’s $5.5 billion Growing Jobs and Small Business package.

“Up until then confidence among sector suffering, people weren’t sure their future,” Strong says.

“It was really about us, small business, you could see the confidence boost… even among the people who are still struggling.”