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Small businesses are feeling neglected in the current economy and many are considering closure, according to ACCI research.
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Red tape ‘strangling’ small businesses: ACCI
24 July 2024
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In the last 12 months, 45 per cent of small business owners have considered leaving or shutting down their business, as revealed by the ACCI 2024 Small Business Conditions Survey.
The data highlighted that small businesses are feeling “strangled by red tape” more than ever.
ACCI chief executive officer Andrew McKellar said the survey shows small businesses need more help and attention from policymakers and regulators.
“Small businesses are the backbone of our economy,” McKellar said.
“However, our new survey shows the dire conditions they face and they are often a second thought when it comes to policy making, legislation and regulations.”
The survey found that if almost half of small businesses were to close as a result of red tape, a significant impact would be felt by local communities.
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“If these businesses do end up closing, more than 1 million small businesses will disappear, resulting in job losses for over 2 million Australians,” ACCI said.
In the research, 82 per cent of small business owners said that red tape is having a major or moderate impact on their business, with many saying the impact has increased in the last 12 months.
Fifty per cent of respondents said they are currently spending more time and money on red tape than they were 12 months ago.
ACCI said this increase reflects the cumulative value of recent regulatory changes felt more acutely by small businesses.
McKellar said the government needs to pay more consideration to small businesses to avoid this “crisis” they’re currently experiencing.
“Small businesses need more consideration from governments, especially when they decide to change rules and regulations,” McKellar said.
“Governments tend to be very good at introducing new regulations but not so good at explaining those changes.”
In addition to government regulation negatively impacting small businesses, the increased cost of living continues to be an immense pressure in the current economic climate.
Most small business owners indicated they face staffing shortages, which adds to the daily struggle of keeping their doors open.
“The current environment makes it hard for small businesses to create jobs and employ people,” McKellar said.
According to the survey results, red tape also has a perceived impact on profitability, as 40 per cent of small businesses anticipated reduced profits compared to the 2022–23 financial year.
This is paired with the changes to industrial relations laws recently passed by parliament, which are a major concern for small businesses.
McKellar said the expected impacts of the government’s industrial relations laws over the next 18 months will be a “further kick in the teeth.”
“We have yet to see the full impact of the government’s industrial relations laws flow through, but small businesses are very worried about the potential for unions to interfere with their decision-making,” he said.
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