Lobby Group Head Urges Calm as Victoria Faces Sharp Decline of 7,606 Businesses in FY23

Victoria has witnessed a large number of businesses exit in the 12 months to June 2023 but this should not cause panic, according to the chief executive of a local business lobby group.

Australian Business Statistics (ABS) data showed that 7,606 businesses fled Victoria in 2022/23, reflecting a one percent annual drop in the total operating business count to 719,233 from 726,839. This is the first time Victoria saw a yearly drop in businesses after enjoying continuous growth over the last few years, even achieving a 10.9 percent increase in 2021/22.

“Look over the past 12 months, it’s certainly been a drop in confidence, and that’s starting to come through with the ABS numbers there and some of the survey work that we’re doing but let’s not panic,” Victorian Chamber of Commerce and Industry CEO Paul Guerra told 3aw.

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“Over the past four years, we’ve actually grown the amount of businesses in the state in total to a significant number. So yes, it’s a blip, but it’s not time for panic, it is time to put a floor underneath this and start to look forward.”

Mr. Guerra, however, noted that the Victorian government has implemented schemes that made it hard for businesses to survive.

“The payroll tax…roughly on a par with the rest of the states, but it’s a mental health levy and then the COVID debt recovery levy that’s put on top of that. That has made life difficult for some businesses.”

In June, the chamber published its regulatory reform policy paper, which listed higher costs of doing business and inefficient and time-consuming administration of regulation as factors the government must address to encourage investments.

“The current economic headwinds and cost-of-living escalations go hand in hand with rising business costs, and we must start implementing policies and strategies now to improve business productivity,” Mr. Guerra said, noting that “Victoria is perceived as the most expensive place in Australia to do business.”

COVID-Debt Levy A Factor

Business Council of Australia chief executive Jennifer Westacott had previously called out the Victorian government for the imposition of the COVID debt levy, which she said deters businesses in the state.

“This budget makes it clear that the state government is willing to charge companies more to do business in Victoria at a time where we need to be accelerating investment in order to drive faster wage growth, protect jobs, and grow the economy,” Ms. Westacott said.

The Liberal Party of Australia Victorian division also said that the Andrews Government has made it difficult for small businesses to thrive.

“Under Labor, small businesses in Victoria are being slugged with increased taxes and rising costs, and the Andrews Government is providing little relief,” the party said. “Traders in Warrandyte, still recovering from the pandemic, have been hit with a 42 percent increase in WorkCover premiums and a 25 percent increase in power bills.”

Meanwhile, all other states recorded increases in registered businesses, with the Australian Capital Territory having the highest growth rate of 3.5 percent to 35,098.

The number of registered businesses climbed 2.3 percent to 497,002; two percent to 16,107 in the Northern Territory, 1.1 percent to 159,553 in South Australia; and 0.9 percent to 870,916 in New South Wales.

Both Western Australia and Tasmania saw an increase of 1.9 percent to 246,661 and 43,415, respectively.