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Sunday, July 25, 2021

ACT a tough setting to start and grow small business

A recently released national small business report shows Canberra enterprises face some of the toughest conditions in the country, with the ACT ranked Australia’s sixth best jurisdiction for starting and growing a business.

The Supporting Economic Recovery – What We Can Do for Small Business report, commissioned by NAB, found ACT businesses particularly struggle with tax and business and property permits.

The NAB report pointed to ACT businesses facing the highest tax burden – despite also holding highest threshold for businesses to qualify for payroll tax, a $2 million annual turnover – and the longest wait time to acquire business licences.

Despite this, founder and chief instructor at Canberra Martial Arts and Fitness in Phillip, Tom Adam, told Canberra Weekly the ACT is “quite good for low-cost operations” like his.

“The majority of costs are borne by landlords, which is then passed on through higher leases,” he said.

“I’m no doubt paying 20-30% more for my lease because of the rates component for the building.”

Mr Adam said he doesn’t see the money spent in rates reflected in infrastructure investment in the ACT’s commercial precincts.

“In places like Phillip and Fyshwick, millions of dollars in rates being raised every year, it’d be remiss to say I can see that being placed back into the infrastructure.

“We definitely generate more revenue than we cost,” he said.

Canberra Business Chamber CEO Graham Catt said the NAB report shows “it is far more difficult than it should be for owners to build and grow a successful small business”.

“Business survival is important. The ACT has one of the highest rates of new business formation in the country, but we also have one of the greatest rates of new business failure.

“We need businesses to grow so that they can provide more jobs for Canberrans … But we can’t encourage more entrepreneurs if our laws, regulations and taxes make it difficult for them to survive, much less succeed.”

Mr Adam said one of the biggest issues he faced establishing his business was the lack of affordable, centralised commercial space available to lease.

“The biggest hindrance we’ve had in last 10 years essentially is finding suitable large floor space facilities in easily accessible areas,” he said.

Mr Adam said zoning more space for commercial developments near town centres would serve to benefit businesses across Canberra.

“There’s a complete lack of larger spacing available at a reasonable price,” he said.

“We can find heaps of places at Fyshwick, Hume or Mitchell, but we wanted to be closer to people’s lives.”

The NAB report showed the ACT is the top Australian jurisdiction for management capability due to higher levels of post-secondary education.

However, Mr Adam said a common sentiment held by Canberra business owners is difficulty competing with the ACT and federal governments in the Canberra job market.

“It’s very hard to find people who will stick around because, before March this year, you’d lose good people who walk away to a job paying 30% more doing 20% less.

“I had that experience being paid handsomely (in the public service) … a lot of us were being overpaid for the services we were providing,” he said.

Mr Adam said it’s also tough to compete on superannuation.

“As a small business I can’t match the 15.4% of a federal department or 17.2% at UC. Those benefits they’ve achieved over that time would just flatten the business,” he said.

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