Townsville Business Confidence Slides
PVW Partners’ June 2024 quarterly Business Confidence Survey has shown that despite a strong start to 2024, Townsville’s business confidence has slipped backwards. The June 2024 quarter resulted in an index of 1.7, a decrease of 3.9 from the previous quarter.
Sonia Chalk, Partner at PVW Partners Accounting and Advisory firm said, “Whilst this may appear to be a significant decrease, the index is still in positive territory, higher than the June 2023 quarter and is similar to the September 2023 quarter”.
Commencing in September 1991, PVW Partners Townsville Business Confidence Survey has now been running for over 30 years and is a unique measure of the levels of confidence of Townsville’s business community.
Sonia Chalk observed “at the time of completing the survey, businesses were facing some uncertainty around local government elections which may have had an impact on this quarter’s results. This quarter showed businesses across the board expected to see a decrease in both sales and consumer demand. The large decrease in these two measures has been the major contributor to the slide in the index. In contrast to the sentiment of decreased sales and demand, there are actually fewer businesses planning to reduce advertising, travel and entertainment”.
Sonia Chalk went onto comment “it was pleasing to see that employment levels are expected to remain relatively stable with a slight increase in the investment in staff through training. In addition, over 80% of businesses were expecting to maintain or increase capital expenditure”.
At the time of writing, full details of the 2024/2025 Federal Budget are not yet available (the Budget not being handed down until 14 May 2024), however we do already know what personal tax rates will be in force from 1 July 2024. Twelve months ago we asked our survey participants to share their expectations around the Stage 3 tax cuts and at that time only 38% of respondents expected the Federal Government to allow the changes to proceed as they were then currently legislated.
Sonia Chalk reflected “with the benefit of hindsight we now know that our survey respondents were right in being skeptical about the Stage 3 tax cuts being implemented as originally legislated. However, the reduction in personal income tax bills from 1 July 2024 will still be welcomed by many families throughout our region even though they won’t be as large for some families as originally legislated”.
As we did this time last year, we’ve again asked our survey participants to share their expectations for the upcoming Federal Budget. Last year about half of our respondents were expecting an increase in government expenditure in the 2023/2024 Federal Budget. As a % of GDP, government expenditure was forecast to increase in 2023/2024 (26.6%) when compared to 2022/2023 (25.3%), however actual results are not yet available for 2023/2024 to confirm the final position.
Sonia Chalk said “fewer respondents, around 43%, are expecting government expenses to increase in 2024/2025 relative to 2023/2024. Interestingly, despite the recently announced amended Stage 3 tax cuts applying from 1 July 2024, 54% of respondents are expecting higher tax rates or new taxes being announced when the budget is handed down on 14 May 2024”.
Sonia Chalk concluded “while the index has taken a step backwards, there remains some underlying confidence in the region that is not reflected in the overall decline in the index. Forward looking indicators such as advertising and capital expenditure forecasts suggests the decline in index may be a short-term drop. Focus over the coming months will be the Federal Budget which will hopefully announce some regional spending measures together with key policies and other initiatives that will address key business challenges in particular around the rising costs of business inputs and availability of resources to support business growth, including appropriately skilled labour in our region”.