NEARLY half of small to medium businesses in South Australia believe the state economy is stagnating while almost a third believes it is going backwards, according to an annual business survey of SMEs.  

The BDO South Australian State Business Survey 2017 also revealed that businesses would rather see the government act on state taxes before fixing its energy problems.

BDO's David Fechner, business services partner, says the main takeaway from the survey was that 46 per cent of respondents say they would prefer reductions to taxes and levies rather than government policies to reduce energy costs.

BDO is an international network of public accounting, tax, consulting and business advisory firms and its fourth annual survey also showed most businesses in South Australia are investing in backup energy supplies should the events of late 2016 repeat themselves, where the entire state was plunged into darkness.

"The survey showed 37 per cent of businesses were considering reducing their reliance on the grid by investing in battery storage, solar panels and wind generation to offset the impact of energy reliability and rising power costs," Fechner says.

"This is a clear message to policymakers that its greater focus and investment in the State Energy Plan and tinkering with payroll tax concessions don't have real currency with a business sector being relied upon for job creation."

The survey showed 26 per cent of the 130 surveyed South Australian businesses want payroll tax rates reduced, 15 per cent preferred cuts to land tax, and 13 per cent want concessions to workers' insurance levies.

Another figure which surprised John Chapman, the South Australian Small Business Commissioner, was that 73 per cent of businesses said the government does not do enough to procure from local businesses.

Chapman says this is a matter of perception the State Government should address.

"These figures shock me, because there's a lot of work that's been done," Champman said at the launch of the BDO SA Business Survey.

"A lot of businesses just don't know about the work that has been done."

Nearly one in three businesses surveyed were victims of a cyber-attack in the past 12 months, which is nearly double the rate from the previous year with 16 per cent of businesses saying they suffered significant to catastrophic disruption as a result. More than half of the respondents say they are looking to increase investment in IT over the coming 12 months, which BDO says will improve cyber-safety overall.

Out of the businesses surveyed, one in two said their business model continues to be disrupted by emerging technology, and BDO says the state is yet to feel the full impact of this reality.

"There is a gap between business model transformation which is largely known to business leaders, and the ability for their organisation to respond to the opportunities new markets and business models provide," says BDO in the survey.

"Some organisations will be able to adapt, while others may not. It appears the true impact of business model disruption is still to come for most businesses in South Australia."

Overall, surveyed businesses don't have much confidence in South Australia to assist in growing business.

"It's not surprising then that there's little confidence South Australia will deliver opportunities to further grow business, with 74 per cent saying the economy is either stagnating or going backwards," says David Fechner.

"The rate of innovation and chance is sluggish as businesses stay stuck in a holding pattern."

This year's survey ran during July and August, and provides insight from 130 South Australian businesses across the major industry sectors.

Just over half of the businesses represented have an annual turnover of up to $2 million and employ up to 20 people. The rest were much larger, with annual turnover of up to $20 million.

Other key findings:

  • 72 per cent oppose the proposed South Australian bank tax
  • 89 per cent support population growth as a means of growing the state economy
  • 38 per cent found it hard to recruit the right staff
  • 26 per cent are looking to use the Job Accelerator Grant in the year ahead
  • 13 per cent have employed skilled migrants, and of those, 24 per cent say they couldn't survive without them

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