Mid-tier companies upbeat but eyeing end of stimulus measures
Each year KPMG Enterprise carries out a pre‑Budget survey of our client base, which ranges from listed companies just outside the ASX200, to private companies, family businesses, and some public sector organisations.
This year of course is like no other with the economy significantly impacted by the COVID‑19 pandemic. Yet despite the challenges, it is encouraging to see a generally upbeat mood among the CEOs, CFOs and directors surveyed in terms of prospects for the next few years.
More than half reported being optimistic for the future, with just 11 percent pessimistic – down from 17 percent in last year’s survey. Perhaps surprisingly only 42 percent said the crisis had had a wholly negative impact on their business, with half that number believing the experience to be positive. Pressure on costs, margins, revenues and falling demand were the main concerns.
A quick return after the crisis
A sizeable proportion (38 percent) believed they could be fully up and running just three months after the crisis ends, and only a minority thought it would take them over a year to recover, or not at all. This is a good sign for the near‑future.
It is notable that respondents were more optimistic about their own business than the wider economy – almost two‑thirds were concerned about the prospects for the economy more generally when the government spending taps inevitably get turned down and finally off. A certain degree of innate belief in your own company is necessary for business leaders.
GST vs direct tax
The survey showed that raising GST was far and away the favoured option for repaying the country’s debts, along with productivity measures to ‘grow the pie’. No‑one was in favour of direct taxes, which weigh down businesses. It is a ticklish issue for policymakers but one which may ultimately have to be reconsidered in these unique circumstances.
Confidence in respondents’ own businesses was also reflected in the belief of a large majority that their tax governance procedures were up to the task of dealing with the widely‑anticipated increase in ATO audit and compliance activity, which has eased off considerably in recent months. But with the tax authority’s ‘Next 5000’ program of reviews about to commence, the amount of work needed to be ready in terms of documentation and compliance processes should not be underestimated.
Australia’s mid‑tier business sector is crucial to our national prosperity. This survey shows that even in difficult times they are up for the challenge.