Business nervous about Labor win

SME owners have been spooked by the prospect of a Labor win in tomorrow’s federal election, driving business confidence to six year lows, according to the latest Sensis Business Index.

Just over 60% of almost 2000 SMEs surveyed in November expressed confidence in their business prospects for the year ahead, down from 71% in the last survey in August. The number of businesses who said they are worried about the next 12 months increased from 12% to 20%.

According to Sensis Business Index author Christena Singh, the net fall in confidence, from 59% in August to 43% in November, is a record for the index.

“We have never seen such a dramatic one-quarter fall in confidence in the 14 years Sensis has been tracking small businesses,” Singh said. “And this takes business confidence to the lowest we’ve seen in six years.”

The key reason for the drop – reflecting the results of this week’s SmartCompany Election 2007 Poll – appears to be concerns about Labor’s industrial relations policies, the index reveals.

One third of all SMEs said a possible change of government to Labor was the main reason they were worried about the future. Support for the Howard Government also increased to 46%, its highest level in more than a year, with industrial relations the main reason given by SMEs for backing the current government.

The skills shortage also continues to cause big headaches for SMEs. Difficulty in finding and keeping good staff was rated as a prime concern by 15% of businesses, ahead of a lack of sales on 9%.

The ongoing worry about skills was reflected in a 1% rise in Sensis’s cost of wages measure to 16%, its highest level in two years.

Concerns about Labor’s IR policies are also reflected in an online survey of 200 business executives conducted by The Australian Financial Review this week.

Almost 80% of those surveyed said they are worried about Labor’s capacity to govern, with over 44% expressing concern about the party’s link with the union movement.

Views were mixed about the party leaders, however, with 50% agreeing that Kevin Rudd would make a competent prime minister and 59% saying they believe John Howard still has more to offer in government.