South Australian businesses report muted confidence due to federal legislation, high costs, and weak margins. The latest survey from the state’s business chamber shows a slight improvement in sentiment, but companies still face regulatory complexity and uncertainty over proposed tax changes. Profitability, sales, and orders remain weak, with material and overhead costs at near-record levels.
Red tape reduces productivity
Nearly one in five businesses spend over 20 hours weekly managing administrative burdens, while more than half dedicate at least six hours to compliance. Only 20% of respondents saw improved worker productivity in the past year.
Andrew Kay, the chamber’s CEO, identified excessive legislation and compliance demands as the top barriers to productivity, alongside economic pressures and workforce shortages. He stated that governments should examine these figures to understand the country’s productivity challenges.
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The survey also revealed frustration with government procurement processes, which businesses called overly complicated. Kay explained that these burdens hinder growth by forcing companies to shift resources away from core operations.
Tax changes create investment hesitation
Federal tax proposals, particularly those affecting trusts and capital gains, are a key concern. Three-quarters of businesses have either sought or plan to seek professional advice on the matter, with nearly half considering adjustments to their trust structures.
Over 40% believe the proposed capital gains tax changes could harm investment and growth. Kay warned that uncertainty alone was causing businesses to delay expansion plans. He noted that such hesitation could redirect capital away from job creation and business development.
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The survey found many companies are postponing hiring and capital spending until the tax changes are finalized. Some have paused equipment upgrades or facility improvements, fearing new rules could reduce their returns.
While the federal government argues the changes aim to close loopholes and improve fairness, businesses say the lack of clarity complicates long-term planning. Until the legislation is settled, many will remain in a holding pattern, awaiting details on how the rules might affect their financial strategies.
Without clear guidance, companies cannot make informed decisions about future investments or hiring. The delay in finalizing the tax framework has left many in limbo, unsure whether to proceed with expansion or conserve resources.
