9 May 2006
Business wants company tax cuts to drive growth
Download the May-06 detailed survey's results.pdf (371KB)
The latest D&B National Business Expectations Survey shows ...
Expectations for the Federal Budget
- Businesses expects that cuts to company tax rates would have a greater impact on stimulating their business than cuts to personal income tax rates
Outlook for September quarter 2006
- Business confidence stalls for new financial year
- Oil prices start to bite - negative growth in both sales and profits expected
Actual for March quarter 2006
- Poor results for growth in sales, profits and employment
- Fuel prices continue to grow as a concern for business
Media Release
Australian businesses believe a reduction in business / company tax rates would have a greater impact on stimulating their business than reducing personal income tax rates, according to the latest D&B Business Expectations Survey.
The survey, released on the eve of the Federal Budget, shows that 50% of executives want tax cuts for business / company taxes, ahead of 24% in favour of reducing personal income tax rates and 12% supporting measures to stimulate business investment.
Seven per cent believe initiatives to assist exports would have the most impact for growth while 4% believe a reduction in superannuation taxes and charges would have the greatest impact on their business if addressed by the Government in tonight's budget.
D&B Australasia CEO Christine Christian believes the survey reflects the changing nature of the Australian economy from one where growth has been driven by consumer demand to one now driven by export demand.
"With rising oil prices and speculation about interest rates, there is a growing view that personal tax cuts will be held onto by households rather than being fed into the economy. Business is saying on this basis, the most benefit would be realised from assistance targeted at business rather than individuals," said Ms Christian.
"We see this argument also supported by some calls for further assistance targeted at export growth."
Outlook for September Quarter
In the latest survey, following a slight recovery last quarter, Australian business expectations have turned and taken a more negative view of the future economic environment.
Although expecting the current financial year to end on a positive note, looking ahead to the September quarter, Australian business is expecting negative growth in both sales and profits. These indicators are now at their lowest points since 1991.
Two critical factors seem to be behind this change in expectations: continuing high fuel prices and the weak results now apparent for the March quarter.
The D&B Business Expectations Survey indicates that an ever increasing number of business executives are becoming concerned regarding ongoing high fuel prices.
In February 2006, 37% of executives believed fuel prices would be the key issue to influence their business the most in the year ahead, compared with 34% for wages growth and 19% for interest rates. In March, fuel prices rose to be of concern for 52% of executives and in April, 63%, a significant proportion.
Ms Christian said, "Following the recent spike in world oil prices and the impact on fuel prices, more executives than ever believe that this will impact on their business."
The preliminary indexes for the actual results in March quarter 2006 show negative net indexes for growth in sales, profits and employment, below the quite low expectations. These disappointments would have had a strong impact on business executives' expectations for the start of the new financial year.
D&B Economic Consultant, Dr Duncan Ironmonger, said the D&B survey showed that strong growth in the core sectors of manufacturing, wholesaling and retail were far from certain. Consequently the Reserve Bank's decision last week to raise interest rates seems to have been unnecessary and could well exacerbate the situation.
The D&B index for expected sales is down 14 points to minus one, with 32% of executives expecting an increase in sales and 33% expecting a decrease. The profits index is down 12 points to minus four, with 30% of executives expecting profits to rise and 34% expecting a fall.
Employment expectations are down one point to an index of one, with 14% expecting an increase in staff, and 13% expecting a reduction. Capital investment expectations are down three points to an index of two, with 8% expecting an increase and 6% expecting to cut spending. Inventories expectations are down three points to an index of minus three.
The selling prices index is down six points to an index of 20, with 32% of firms now expecting to raise prices and 12% expecting to decrease prices.
For further information, or to arrange an interview, please contact:
Danielle Woods
D&B PR Manager Australia & New Zealand
(02) 8270 2926
Dr Duncan Ironmonger
D&B Economic Consultant
(03) 8344 2131
About the Survey
D&B Australasia conducts latest Business Expectations Surveys every month. Each quarter over 1,200 business owners and senior executives representing major industry sectors across Australia are asked if they expect increases, decreases or no changes in their upcoming quarterly Sales, Profits, Employment, Capital Investment, Inventories and Selling Prices. Since its introduction in Australia in 1988, the survey has proven to be a highly reliable measure of economic performance.
Note: The index figures used in the survey represent the net percentage of survey respondents expecting higher sales, profits, etc., compared with the same quarter of the previous year. The indices are calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases.
About D&B
D&B is the world's leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world's most valuable commercial database with information on more than 130 million companies.
Information is gathered in 193 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B's commitment to provide accurate, comprehensive information for its more than 150,000 customers.
The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B's history worldwide.
Today Lazard Carnegie Wylie owns an approximate 90% stake in DBA and the local management team a 10% stake.
Strategies for future growth include developing DBA's commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 500 people in Australia and New Zealand.
