Rate hike adds to a cost of business crisis
7 Nov 2023|
The Reserve Bank’s decision to raise the cash rate to 4.35 per cent marks an end to four months of steady rates and indicates that Australia’s economy is still being challenged by inflation.
“Though the hike is intended to combat inflation, it adds another layer of stress on businesses grappling with high input costs and emerging wage pressures,” ACCI chief executive officer Andrew McKellar said.
“Our ACCI-Westpac survey and the NAB monthly business survey show that businesses’ margins are thin. They are struggling to avoid passing on these escalating costs to consumers.
“The tightrope of managing rising operational costs and maintaining competitive pricing is a delicate balance for businesses.
“This dire situation is reflected by the fact business insolvencies have increased by 60 per cent in the year to June. These are now well above pre-COVID levels.
“Such a balancing act will become even more difficult in the wake of the Fair Work Commission’s extraordinary wage adjustments, which will only amplify wage pressures.
“On top of all this, the government is opening up another front. Their misguided ‘same job, same pay’ legislation will serve to corner businesses that are already on the brink, sending them over the edge.
“The Reserve Bank must consider the cumulative impact of these financial strains on the Australian business landscape.
“Only a measured approach will be able to support businesses through these turbulent times.”