Regional businesses across Victoria expect a rocky year ahead, with many lacking confidence in economic conditions either locally or nationally, new research finds.
The VECCI – Bank of Melbourne survey of business trends and prospects for the quarter to June shows regional Victorian businesses suffered widespread declines in sales and profitability, along with lower employment levels and a reduction in overtime hours offered to staff.
The Victorian Employers’ Chamber of Commerce and Industry (VECCI) chief economist Steven Wojtkiw told SmartCompany this morning the survey examines numerous industries including service, retail, banking/finance, transport, manufacturing, farming and distribution. It excludes government departments.
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“Around 70% are small businesses,” he says. “Respondents say, over the last quarter, there was a decrease in business, and a decrease in business expectations for regional Victoria over the next three months.
“They also show a lack of confidence in the national economy in the year to June 2014. Around 40% of businesses expect the national economy to be weaker.”
He says this was an increase on the March results, which showed 27% thought the economy would be weaker.
He says reasons cited by the regional businesses for tough conditions include poor international economic conditions, a slowdown in demand for manufactured Australian goods (including food), and the recent high Australian dollar which has impacted international orders.
“It is too early to see the (currently) lower Australian dollar transfer to business orders,” he says.
Wojtkiw also says respondents report uncertainly about job security, subdued consumer spending and uncertainty about the upcoming federal election as reasons for their lack of confidence.
Regional Australia Institute general manager of research and policy, Jack Archer, told SmartCompany while surveys are good to gain an overall picture, it is important to remember there are many nuances within the different regional areas.
He says government support of innovation and technology access in regional areas can help boost the economic sustainability of small towns.
“The regional areas need access to specialist technical skills, and they need access to technology service providers,” he says. “There are real variations in the levels of services provided.”
He says it is important that small businesses innovation in regional areas is encouraged, so that they can become the anchor of the town, rather than regions relying on the proximity of big businesses to survive.
The RAI has released its [In]Sight competitiveness index, which is an interactive map tracking the competitiveness of Australia’s 560 local government areas and 55 regional development Australia regions. Click here to view the results.