MSI Global Alliance - SME/Business Climate Survey

General News: 22 March 2019

SMEs feeling negative effects of economic downturn, not satisfied with Federal Government stimulus package.

Following the recent Federal Government stimulus package and growing anecdotal evidence of a worsening economy in many sectors, legal and accounting group MSI Global Alliance surveyed 690 Australian SME clients (companies with up to 200 employees). The survey took place between 17 to 24th February 2009.

The following are key results of the study:

• 66% of SME respondents stated that their company is feeling the negative effects of the global economic crisis, with a further 20% saying they expect to feel the impact in the future.

When asked if, given the measures introduced by the Federal Government in its $42 billion stimulus package, the Rudd Government is steering the best course possible through the current economic situation, the following response was recorded:

• 18% of respondents were either Very Satisfied (2%) or Quite Satisfied (16%)
• 37% of respondents were either Very Dissatisfied (15%) or Quite dissatisfied (23%)
• 44% of respondents were Neutral
• 79% of respondents stated that the $2.7 billion of tax breaks targeted at small businesses with turnover of up to $2 million p.a. will not provide sufficient assistance to the SME sector - the mainstay of the Australian economy
• 90% of respondents stated that a reduction in personal income tax rates would be more likely to stimulate consumer spending than the $950 cash payments for low and middle income households and individuals;

From a SME perspective, respondents felt that the most effective way the federal and state governments could combat the economic downturn is to:

• Reduce payroll tax (35%)
• Reduce company tax (32%)
• Provide greater tax relief on capital expenditure (19%).

When asked to identify how their businesses had been impacted in the financial year to February 2009, respondents answered in the following ways:

• 55% said that their clients are delaying expenditure;
• 53% said that revenue is down compared to the same period for the previous year;
• 33% said they have put some capital expenditure on hold;
• 27% said that clients are cancelling work/orders;
• 20% said they had already made team members redundant this financial year;
• 18% said their bankers have tightened their credit and borrowing facilities.

However, on the positive side:

• 34% said they did not expect to make any redundancies in 2009;
• 15% said revenue was up compared to the same period for the previous year

Melbourne based MSI Global Alliance spokesman Charles Hornor commented that "This survey tells us that SMEs are clearly feeling the negative impact of the global economic downturn with 66% of respondents saying they are already feeling it and a further 20% saying they expect to in due course. For more than 50% of those surveyed, revenue is down and clients are delaying expenditure while a third said they have already put some capital expenditure on hold."

"Of course, it is important to recognise that SMEs represent the mainstay of the Australian economy and if they are feeling pain, the ripple effect into households cannot be far behind."

"It is also interesting to note that 90% of the SMEs surveyed felt that a reduction in personal income tax rates would be more likely to stimulate consumer spending than the $950 cash payments introduced by the Federal Government." 

Aitken Partners is a member of the MSI Global Alliance.