Business calls on government to create a more competitive Australia and boost productivity.
Companies downgrading growth forecasts and cutting costs, prompting fresh concerns about business sustainability in a post-mining boom economy.
Business confidence is at an all-time four-year low, according to Newport Consulting’s annual business survey of 259 business leaders in Australia, New Zealand and Asia, despite a suite of efforts businesses are making internally to address low levels of growth.
The report, Current State of Play: Managing in Uncharted Waters, found sinking growth forecasts overall, with a sizeable 59 per cent of surveyed companies expecting growth of less than 10 per cent, compared with just 15 per cent expecting such low growth when the survey first started in 2009.
Underlying the sober business outlook is an increasing concern about the state of the economy (75 per cent), rising business costs (54 per cent) and a need for operational and productivity improvement (71 per cent) going in to 2013. The economic troubles in Europe, the slowing of the Chinese economy and the fall in coal and iron ore prices have generated a significantly more pessimistic outlook compared to last year. Added to this is a growing frustration with government performance where 48 per cent of all respondents report that governments are working against business interests.
The report also reveals that businesses are already taking proactive steps to address the growth slowdown through a fresh look at productivity, and that governments must support these efforts by addressing these and other business concerns. Measures actively being taken by companies to improve productivity included using resources better (71 per cent), identifying hidden waste (62 per cent) and improving customer service (59 per cent).
But business ability to invest in technology and increased training and development has slipped as a priority, reinforcing our findings that cost management is a key business challenge this year. Recruitment strategies and R&D investment rate as a lower priority in driving productivity along with technology and training, raising concerns about business sustainability in a post-mining boom economy and whether businesses are getting the support they need.
“The fact that businesses are making productivity improvements at a microeconomic level is good news,” says David Hand, Managing Director of Newport Consulting. “However, the government must step in at a macroeconomic level to support this progress. Action is needed to boost productivity in Australia and the wider region, to ensure sustainable levels of competition and economic performance in the immediate future.”
Other key findings of the report include the emergence of a hiring freeze in the region, with some 70 per cent of companies planning to reduce or not hire staff, and a focus on top-line growth as companies adopt a strategy of sales volume rather than product innovation to drive their growth.
“In Australia the government has just released its Asian Century White Paper, pointing to a range of opportunities for growth in Australia in the two decades to 2030. But in reality, the government must do more to shape the innovative, productive and diverse workplaces we need to capitalise on such opportunity,” said Mr. Hand.
Next year’s Current State of Play report is expected to further track progress made in the discrepancy between business action and government support throughout Australia, New Zealand and Asia.
