How the GFC pushed businesses to the wall

Chalpat Sonti
October 22, 2010

Just how badly, or well, businesses survived the global financial crisis and other economic turmoil of the past two years is evident from new official figures.

Australian Bureau of Statistics data shows in the two years from June 2007 - encompassing the boom and subsequent bust - more than half a million Australian businesses shut up shop.

Nationwide,there was a 73.6 per cent survival rate in the two years, with the number of businesses falling from 2.07 million to 1.52 million.

In Western Australia, about 57,000 businesses, including 10,100 new businesses, were forced to the wall.

That is an attrition rate of 28.3 per cent of all new businesses in the period, but the figures also tell a tale of two distinct years.

In June 2007, there were 211,000 businesses with an ABN and registered for GST in the state. One year later, just before the economy headed south, that had dropped to about 178,000.

A further year on, the number was about 154,000, an overall survival rate of 73.1 per cent.

The public administration and safety sector was the worst performer, with a survival rate of 65.3 per cent. The mining industry saw a 76.5 per cent survival rate, while health care and social assistance did best, at 81.2 per cent.

The number of small businesses (up to 20 employees) fell 24,931 nationally in the period, with more than 80 per cent of the fall occurring during the worst of the financial crisis, in 2008-09.

Most of the fall was in businesses employing between one and four people.

But federal shadow parliamentary secretary for small business Scott Ryan said the national drop in small business numbers was worrying on other future fronts.

"Small business is the economy's canary, a key leading indicator," Mr Ryan said.

"The (federal) Labor government's stubborn intention to saddle small business with extra costs such as the superannuation levy increase and the paperwork burden of being a 'pay clerk' for (a) flawed parental scheme will only ensure this worrying trend worsens in coming years."

Meanwhile shadow small business minister Bruce Billson has confirmed his intention to introduce a private members bill which would see Centrelink take over the running of the government's proposed parental leave scheme.

As it stands, Centrelink will fulfil that role for the first six months of the scheme, before the responsibility for much of the scheme falls to employers.

They will be required to distribute the payments under the scheme to staff, after being forwarded the money by Centrelink.

"Despite strong objection from every corner of this continent, from Gladstone to Esperance and from every organisation that has any concern whatsoever about the compliance and red tape obligations on businesses large and small, the government seems to steadfastly want to persist in imposing this pay clerk obligation... on employers, despite the fact that it has offered no compelling reason for doing so," Mr Billson told Parliament on Wednesday night.

He will need the support of independents or the Greens to make the changes to the scheme, due to start at the beginning of next year.

It will see eligible parents receive the minimum wage ($569.90 a week) for 18 weeks.


http://www.smh.com.au/small-business/how-the-gfc-pushed-businesses-to-the-wall-20101022-16wrx.html