The spate of major project deferrals announced last year have hit confidence levels among WA business hard, with expectations for the state economy dropping to its lowest level since the GFC.
With two months left before Western Australians head to the polls, a new survey for the December quarter showed only 13 per cent of WA firms believe the economy will improve in the next 12 months, a sharp decline from the 27 per cent recorded in the June quarter.
The Commonwealth Bank and the Chamber of Commerce and Industry (CCI) survey also revealed an increase in WA businesses expecting the economy to deteriorate from 30 per cent to 45 per cent.
“While business confidence has been falling over the last 12 months, the sharp decline recorded in December follows the recent announcements of major project deferrals in the state,” CCI chief economist John Nicolaou said.
“It’s expected business uncertainty will continue into next year while concerns remain on what the flow-on impacts of project referrals will be on activity outside the resources sector."
Local operating conditions have been a major factor in the lower confidence levels, with nearly one third of WA firms reporting sales turnover had declined this quarter, while wage pressures and labour availability continue to be a concern.
“Coming into an election year for both State and Federal Governments, it is clear that labour market reforms which address the high cost of doing business and increase the supply of available labour must be a priority,” Mr Nicolau said.
Looking ahead to the coming 12 months, local businesses again cited wage costs as the number one issue, along with access to finance, borrowing costs, infrastructure constraints, the carbon tax, government regulation and global economic growth.
“With the expectation of lower sales, firms need to be thinking about how they can continue to push on areas like productivity as we move into 2013 – in this way, they will be in a far stronger position to successfully navigate softer business conditions,” Greg Caust, Commonwealth Bank WA general manager corporate financial services, said.
