Peak business body calls for payroll tax reform in upcoming budget amid rising business costs in regional WA

Regional businesses in WA are being battered by rising costs and skills shortages, with more than half reporting a drop in profit margins, the State’s peak business group says. In the March quarter, 51 per cent of regional businesses reported a drop in their profit margins, while 34 per cent reported profits were steady and 15 per cent saw profits increase. Since December, business confidence has held firm in regional areas but only one in three regional businesses expect conditions to improve in the next quarter. The Chamber of Commerce and Industry WA chief economist Aaron Morey said businesses in the Kimberley (44 per cent), Goldfields-Esperance (45 per cent) and Pilbara (38 per cent) were the most optimistic. “The end of the wet season is usually a cause for an uptick in confidence in the Kimberley as activity starts to return to normal at this time of the year,” he said. “Optimism in the Goldfields-Esperance and Pilbara regions is likely being driven by strong iron ore prices and record high prices for gold over the past three months.” Rising costs were the biggest barrier to growth in the March quarter according to three in four businesses in regional WA, down one percentage point from the December quarter. Mr Morey said the cost-of-business crisis was biting harder in regional WA than in Perth. “We’re seeing rising costs consistently ranking as the number one concern for business across WA, both regional and metro, but the numbers are even higher outside the city,” he said. “The spiralling cost of doing business is just one of the reasons why the State Government must seriously consider payroll tax reform in the upcoming budget. “Small and medium-sized businesses in our regional communities are being squeezed, so any relief the Government can offer would help to ease that pressure.” Finding staff is still a challenge for regional businesses, with 66 per cent reporting the availability of skilled labour as another barrier to growth, down two percentage points on the December quarter. “Skilled trade workers are still the most in-demand occupation across WA, followed by machine operators and automotive mechanics,” Mr Morey said. “We’ve also seen three in four regional businesses report an increase in the cost of hiring and retaining staff over the quarter, with more than three in five expecting labour costs to climb again in the next three months.”