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New South Wales

Private businesses in New South Wales are becoming optimistic, after years of low growth and funding difficulties. Many business owners and managers view the recent change of government as a positive development. We believe NSW private businesses feel they have voiced their concerns to the NSW Government and together they can kick start economic growth.

Despite a year of modest sales and profit growth, New South Wales businesses are optimistic about their short- and medium-term prospects. There are signs that capital is on the move again, and business acquisitions are increasing in frequency.

Although New South Wales does not suffer from skills shortages as much as other states, there is still strong competition for the right talent.

Many businesses in New South Wales told us they struggled with their day-to-day operations. Compliance with government regulations and taxation is a big part of this problem. PwC believes the new state government has an opportunity to boost the business sector by removing red tape. One example is the Queensland government’s ‘one-stop shop’ support centre for small businesses, which can save time and trouble for business owners.

Business growth Sales and profits growing at average pace Private businesses in New South Wales experienced sales and profit growth similar to the all-state averages. However, these averages were considerably lower than figures recorded in surveys before the global financial crisis, which indicates the economic recovery still has a way to go. Retailers in New South Wales are feeling the pinch, as are their counterparts in other states and territories. There is also limited activity in the construction sector.
Businesses are beating their targets The share of businesses in New South Wales that met or exceeded their targets jumped six percentage points since the last PwC Private Business Barometer in October 2010. The proportion of businesses that undershot their targets fell by a similar amount. This is a positive result compared to many other states where businesses tended to perform worse than expected.
Optimistic outlook for the medium term Private businesses in New South Wales have an optimistic outlook for the medium term and ambitious – though average – expectations for the year ahead. Company owners and managers may be waiting to see if the newly elected state government will stimulate business and investment, after many years of uncertainty under the previous government. In anecdotal discussions with PwC, private businesses in the construction sector told us they had high hopes the change of government would be good for business.
People Talent shortage bites, but not as hard as other states New South Wales private businesses reported the lowest level of concern about a lack of qualified candidates for jobs, at 40 per cent. However, the shortage of skills was still by far the most significant impediment to hiring for New South Wales companies, which matches what business owners have been telling PwC anecdotally. General economic unknowns, high wage costs, lack of business demand and government regulations were also concerns.
Funding Investment plans muted for the time being New South Wales private businesses were less likely than those in South Australia and Western Australia to be planning major investments in the next year. This again reflects their relatively modest outlook for the short term, and may also be an effect of their comparatively low profit growth over the past 12 months. However, if they achieve their medium-term growth goals, they may be in more of a mood to invest within three years.
Business operations Capital may be on the move again Private business owners and managers in New South Wales were most concerned about funding issues (71 per cent nominated this as a key challenge). PwC understands many private businesses are still having difficulty getting funding for expansion or new opportunities. However, we have seen early signs that capital is on the move again. Business operations were the second most frequently cited challenge (by 59 per cent of New South Wales respondents), closely followed by people issues (58 per cent). New South Wales private businesses most often listed consumer confidence as an impediment to achieving their growth targets. Readers should note that the surveys for this PwC Private Business Barometer were conducted before the New South Wales state election, when businesses and consumers were in a period of uncertainty. Since the election, PwC has seen a marked improvement in business owners’ level of optimism, although they recognise the new government may not immediately be able to fix every problem the state faces.