Small and medium-sized businesses (SMBs) are the heart of the Australia and New Zealand economies, representing about 97% of all businesses in both countries. Digitising small businesses across the region can create significant economic opportunities. Recent research from global small business platform, Xero, and the New Zealand Institute of Economic Research (NZIER) found that SMBs could increase Aotearoa’s GDP by up to NZ$7.8 billion (A$7.2 billion) each year by using cloud-based tools to improve productivity. In Australia, research suggests that if all SMEs fully embraced digital technology, they could unlock another A$181 billion in revenue.

Amazon Web Services (AWS) and Xero have a shared vision to help SMBs unlock this opportunity and advance the digital economies of both countries. To support this, we are collaborating to offer AWS Lift through the Xero App Store, to help Xero’s small business customers and ecosystem community leverage the power of the cloud to digitally transform their business.

Launched in February this year, AWS Lift is a program that helps SMBs to kickstart their digital transformation journey by offering a starter pack of AWS Credits* over 12 months to help them get started on the cloud. SMBs can access these credits, up to US$83,500, to try out over 240 AWS technology services including machine learning (ML) and artificial intelligence (AI), using its extensive global cloud infrastructure and deep functionality.

SMBs can also use AWS Lift to modernise operations and move from legacy on-premises data stores to a fully managed cloud platform offering world-class security, resilience, and the ability to quickly scale. SMBs receive support from AWS and a global community of AWS Partners, who have specialised skills, capabilities, and differentiated solutions for organisations from every industry and of every size to work towards digital transformation.

“At Xero, we enable small businesses and their advisors to operate efficiently using our cloud accounting platform,” said Jeremy Butteriss, EGM ecosystem and partnerships at Xero. “We know that small businesses do better when supported by technology, so we are proud to support small businesses and our ecosystem community to get started on their digital transformation journey leveraging AWS’s broad and deep set of services through the AWS Lift program, available directly via the Xero App Store.”

Empowering SMB digitisation with the cloud

In Australia and New Zealand, SMBs such as Lovisa (retail), Kontentlabs (education), Beyond Essential (healthcare), are already tapping the power of the cloud to digitise their businesses, while having the flexibility to scale as needed with AWS’s pay-as-you-go options.

For PaySauce, a Kiwi software company based in Wellington that provides payroll solutions for small and micro employers, AWS Lift was instrumental in supporting business growth and innovation.

“As a SaaS company looking to expand across New Zealand and Australia, we need access to world-class technology to help us rapidly innovate and scale to support our growth,” said Asantha Wijeyeratne, CEO and co-founder of PaySauce. “AWS Lift allowed us to get started quickly on AWS and access their comprehensive set of services, global cloud infrastructure, and team of AWS experts to help us rapidly experiment and accelerate our transformation.”

For Auckland-based HyperCinema, the world’s first live AI cinema where audiences are the star of a movie, AWS Lift helped them bring their innovation to life quickly.

“Built on AWS’s infrastructure, we have pioneered a world-first in AI entertainment and brought this unique innovation to market more rapidly than expected,” said Tarver Graham, CEO, Gladeye, which co-founded HyperCinema. “We were able to leverage a range of AWS services and infrastructure, which provided us with the scale and distributed compute capability to operate at ultra-high speeds and deliver a smooth movie-going experience to our audience. We received exceptional technical support and guidance for what is a highly complex service, and we’re excited about the possibilities of our collaboration as we continue to push the boundaries of AI entertainment globally.”

“The digital economy has created new opportunities for SMBs in Australia and New Zealand,” said Pip Gilbert, head of strategy and operations, AWS New Zealand. “Business leaders that accelerate their digitisation journey unlock growth, innovation, and cost optimisation opportunities, while building resilient and agile organisations for tomorrow. By leveraging AWS and Xero, SMBs can get started on the cloud quickly and easily, and leverage advanced services like AI/ML and data analytics to experiment and drive insight-driven transformation.”

Xero has been a long-term customer and partner of AWS since migrating their platform to AWS in 2016, which has enabled them to scale, innovate, and rapidly grow their business globally. From a startup in New Zealand in 2006, they now have more than 3.95 million subscribers globally.

Recently, Xero announced it was experimenting with a generative AI in its customer experience platform, Xero Central. As an early adopter of cloud tech Amazon Bedrock, a service to build, scale, and accelerate the development of generative AI applications, Xero has the advantage of experimenting with different foundation models and large language models, plus Xero’s extensive knowledge base to enhance the support provided to customers.For more information on getting started with AWS Lift through Xero, please visit the Xero App Store

Business travel will remain strong in 2024, with one of Australia’s foremost industry experts forecasting exciting changes from mid-year. Increased capacity and greater competition among airlines are anticipated to lower airfares and further boost business travel.  

Tom Walley, Australia-based Global Managing Director of Corporate Traveller, the flagship SME division of Flight Centre Travel Group, says: “The business travel industry is healthy and is already seeing some critical changes come through. Premium fares have already dropped, and we can expect to see economy fares come down by mid-2024 as flight capacity from international carriers increase. 

“We’re seeing travellers take advantage of being able to combine business and leisure travel. There’s also a real business focus on face-to-face meeting and collaboration, given the evidence that in-person meetings are the most productive way for businesses to operate. Overall, 2024 will bring good news for businesses that travel.”

Based on his industry and market observations, emerging global trends and travel habits among Corporate Traveller customers, Tom shares his six forecasts for 2024.

2024 Business Travel Trends Forecast

1. Business travel remains a high priority despite economic impacts. Lower airfares in 2024 will open options for budget-conscious business flyers. Tom said while economic uncertainty posed concerns for any business, there would be a meeting point in the travel industry with falling travel costs. A recent Corporate Traveller business survey found that 91 per cent of SMEs would continue to travel regardless of economic pressures. Furthermore, an October 2023 survey by the Global Business Travel Association found about 70 per cent of corporate travel buyers expect to increase or maintain their travel budgets in 2024^[1].

1. Premium international flight seats to drop further. Tom has observed business class seats to destinations such as London and New York reducing for the first time since the pandemic and has seen this firsthand in his own recent leisure and business travel, with costs ranging by up to 60 per cent depending on the time of booking and flexibility. He suggests utilising a travel management company – who can do the leg work for you and hunt down the best price – which is key to getting the best deal. As much as possible, Tom suggests being flexible with the dates and times that you fly – and with what airline you travel on. 

1. International demand to continue into 2024, but seat capacity will soften prices. Flight Centre’s current Big Red Sale indicates that every day prices will drop moving into next year. Competition will begin driving international travel prices down as Chinese carriers made a strong return to Australian capital cities in the final quarter of 2023. All eight Chinese airlines that operated to Sydney pre-pandemic have now returned, with the final carrier, Sichuan Airlines, marking the milestone at the end of October 2023^[2]. Further, China Eastern Airlines and China Southern Airlines both returned to Brisbane this month^[3]. Existing carriers are also increasing their capacities, with available seats up 25.6 per cent in September 2023 compared to the same time last year^[4]. Tom predicts peak travel periods, such as the 2024 European and North American summer, will continue to bring about high demand, and suggests business travellers plan and book in advance if they are looking to travel popular routes throughout this period. 

1. Regional business travel will sustain rapid growth. After recent Corporate Traveller research identified a 29 per cent surge in regional travel bookings this year – with some routes having grown by more than 60 per cent – Tom predicts regional travel will continue at these levels. The fast-growing mining industry, including mining for critical minerals used for renewable energy infrastructure, is believed to be behind the boom: nine of the top 10 fastest-growing routes were in Queensland where there has been high investment in regional industry, such as mining and tourism. 

1. Bleisure trips on the rise. Tom expects bleisure travel to continue to rise in 2024 as the world returns to normality, flight capacity continues to grow, and collaboration remains a priority. As we see a fixation on productivity amidst economic pressures, organisations are looking to meet and gather face-to-face. Employees are taking advantage of increased business travel to extend their trip for joint leisure purposes. Corporate Traveller’s own booking data found one, two, and three-day trips between May and October 2023 dropped by an average of 3.9 per cent year on year, while four, five, and six-day trips increased by an average of 4.6 per cent, year on year. Specifically, Corporate Traveller saw a 5.8 per cent growth in six-day trips. This trend is expected to carry into 2024. 

1. Brisbane to take over Perth as the most popular destination for international business travel as Chinese carriers add capacity. In 2023, Corporate Traveller’s booking data showed that Perth saw a 34 per cent growth in international business travel, compared with Melbourne and Sydney (each less than 10 per cent growth), Brisbane (25 per cent) and Adelaide (21 per cent). By mid-2024, Tom expects Brisbane, Sydney, and Melbourne’s growth rates to outpace Perth’s with the return of Chinese airlines. Sydney and Melbourne have made a full return to eight Chinese carriers and the Victorian Government has revealed it will see further flights added in September 2024^[5]. China Southern Airlines landed in Brisbane for the first time in four years on 18 November 2023, China Eastern Airlines returns from December 2023, and more carriers are expected in the new year. 

The slowest paying industries in Australia have been revealed by leading financial services company OptiPay with some businesses waiting up to 60 days after the end of the month to be paid for invoices. 

“The holiday period can be a difficult time for businesses to maintain cashflow especially when creditors delay paying invoices,” says OptiPay CEO Angus Sedgwick.

“It’s vital that business owners have a cash flow management plan in place to prepare for disruptions and also look at financing solutions to help them navigate periods of growth or when access to capital becomes tight,” he says.

OptiPay data shows the slowest paying industries:

Commercial property services            60 days EOM

Mining services                                   45 days EOM

Labour hire                                          30 days EOM (end of month)

Manufacturing                                     30 days EOM

Transport and Logistics                      30 days EOM

“We find that with all these industries, invoice financing can really help when it comes to maintaining cash flow,” says Mr Sedgwick.

“Instead of waiting for customers to pay their invoices, business owners can unlock cash tied up in the money owed to them from their customers by assigning the invoices to a third-party finance provider and receive 70-90% upfront with the remaining 30%-10% paid when the customer makes payment less a small fee which the financier retains.”

Commercial Property Services

Commercial property services such as contract cleaning companies often have expenses they need to meet in order to keep their business running such as cleaning equipment and wages. Invoices issued to the owner of a building or a body corporate often have payments terms of 30 days from the end of that month.

“In many cases owners won’t see a revenue for up to 60 days so we’ve seen invoice financing becoming a popular option for those businesses that don’t want to rely on overdrafts and want access to funds generated by invoices immediately,” says Mr Sedgwick.

Mining Services

“Contractors tend to wait on average 56 days for payment with shorter invoice terms generally difficult to negotiate with big mining companies,” says Mr Sedgwick.

“This can be hard for small businesses that perhaps deliver for one mine as they’re waiting a long time to get paid,” he says.

Contract Labour Hire

Companies that outsource labour hire often find a large gap between paying their contractors and the payment terms of their customers. They’re often required to pay their contractors every week but the businesses using their contract labour force don’t pay invoice for up to 60 days after the end of the month.

“Companies can find themselves suddenly in need of working capital to meet the contractor payroll,” says Mr Sedgwick.

“When your business is people, you need to ensure they are paid on time every time so having a cash flow plan in place is essential.”

Manufacturing

A key cash flow issue for manufacturers is the cost/payment lag – the time between when the costs associated with manufacturing a product are incurred and when payment from customers is received.

“Often a large proportion of a manufacturer’s working capital is tied up in materials, stock and debtors which leaves an inadequate sum of working capital to pursue growth opportunities,” says Mr Sedgwick.

Transport and Logistics

Transport businesses that are either sub-contracting to larger carriers or dealing directly with their end customer have to pay drivers, fuel, repairs and maintenance weekly but generally don’t get paid until at least monthly but sometimes on 45 day terms. 

“We often see cash flow problems created in the transport industry which is why invoice finance has become very popular,” says Mr Sedgwick.

Chartered Accountants ANZ (CA ANZ) believes small businesses could be in for some unforeseen pain following changes to tax collection methods made by the Federal Government as part of the MYEFO announcement.

“With more than $95 billion in tax debt to collect, it is not surprising that attention is being given to the collection of that debt,” said CA ANZ Senior Tax Advocate, Susan Franks CA.

“The ATO has announced that it will be tightening the ability of taxpayers to access payment plans. 

“Taxpayers will now need to prove they have capacity to pay the tax debt and an emphasis will be on paying the tax debt as early as possible.

“Small businesses can have difficulty accessing finance from traditional financial service providers. With the general interest charge approximating the small business interest rate charged by banks, small businesses have found it easier to apply for finance in the form of a payment plan with the ATO than a loan from a bank. This is evidenced by small business owing most of the outstanding collectible debt.

“Denying deductibility of the general interest charge will effectively increase the cost of accessing finance with the ATO and make obtaining external finance more attractive.

“The days of the ATO being the banker for small business are numbered.

“Small businesses should talk to their Chartered Accountant about their cash flow and financing to ensure that they can pay their tax on time,” Ms Franks said.

(For more detail on Denying deductions for ATO interest charges refer to page 192-193 of the Mid-Year Economic and Fiscal Outlook 2023-24)

Hospitality Business Owners facing an 18% drop in revenue are urged to increase their prices or prepare for a smooth exit in 2024 with 30% of privately owned businesses set to change hands in the next 5 years!

In the bustling world of hospitality, where the aroma of freshly brewed coffee mingles with the holiday spirit, there lies a tale of resilience and transformation. 

The industry, grappling with the complexities of the cost of living crisis and soaring operational costs, is finding innovative solutions to not just survive, but thrive and exit with confidence in the face of adversity.

The sector has seen a like for like decrease in hospitality revenue takings, mainly the café section by 18% year on year. 

Link Business is a leading brokerage specialising in business transactions, Farzin Hesari, CEO says the challenges faced by small hospitality businesses during the festive and New Year period and beyond cannot be underestimated. “It can be a tough time for hospitality entrepreneurs. The rising cost of living and rent poses a significant threat, and there’s a genuine concern that customers might opt for a quieter summer at home,” says Farzin Hesari, CEO of Hesari.

Helping Business Owners Exit Their Sector

For some having owned a successful business for a number of years now is a good time to exit the Industry as the omens point to things getting harder in 2024. 

Sally Weatherson was faced with just such a decision. With an unwell husband, wages and food costs at an all time high, despite having good landlords, Sally knew the time to sell had come, “ We decided to sell our Cafe and a Flower shop and it could have been really stressful. But Link Business and their two agents Kristy and Nick Kolaitis, they were the right people who were passionate enough to sell your life’s work, and that is comforting at a time of huge stress. They were always on the phone, kept pushing for us and kept us informed”, said Ms Weatherson. 

Embracing Change and Transparency

Hesari advocates for a shift in mindset, urging businesses to move beyond the small business mentality if they choose not to exit. One proposed strategy is a modest increase in coffee prices by 50 cents. Hesari believes that customers, understanding the challenges faced by businesses, will remain loyal. “We need to break free from the fear of upsetting our customers. A slight increase in the cost of coffee won’t deter them, especially when they understand the challenges we’re facing,” he emphasises.

Utility bills and rates are on the rise, adding to the financial burden of these businesses. Hesari encourages businesses to communicate transparently with their customers. “People appreciate honesty. If they explain the situation and the reasons behind these increases, they are more likely to understand and continue supporting us,” he asserts.

To support businesses in navigating these challenges, Link Business offers a comprehensive Business Value Catalogue on its website. Farzin Hesari encourages entrepreneurs to explore the catalogue, stating, “Jump on the Link website and see the business value catalogue for yourself. We leverage data and technology, analysing trends to help you buy or sell your business successfully.”

The company employs mergers and acquisitions strategies, recognizing that 30% of private businesses are expected to change hands in the next five years. Hold onto your Coffee Cups, 2024 could be very bumpy!

The average mobile downloads of Vodafone post-paid customer is among the nation’s biggest downloaders, consuming a whopping 25 gigabytes of data on their mobile a month – which is 57 per cent more than the national average of 15.9GB* and more than enough data to “Netflix and chill” for a hundred hours straight!

These stats and more have been uncovered in Vodafone Unwrapped 2023, a first-of-its-kind dive into how Australians are using their mobiles to download, talk and text.

Unwrapped reveals Vodafone customers spent more than 8.25 billion minutes on their mobile this year, the equivalent of talking for 15,703 years non-stop!

When it came to the busiest month for chatting on the phone, May was the most popular, with some 383 million calls being made – hopefully to the nation’s mums to wish them a happy Mothers’ Day.

Vodafone Unwrapped 2023 key stats include:

• The average mobile downloads of Vodafone postpaid mobile customer is approximately 18% more data than in 2022
• More than two million Vodafone customers make a call every day
• More than 2.79 billion phone calls – or about 7.94 million a day – have been made on the Vodafone network in 2023
• The average number of calls per customer per week = 27
• The average number of minutes per customer per week = 79
• On average, Vodafone customers spend 2.9 minutes for every call made on the network 
• 5pm on a Thursday arvo is the chattiest hour of the week
• Good Friday (Friday 7 April), had the greatest number of calls on a single day, when Vodafone customers made more than 14.9 million calls
• 5G network traffic has doubled in size over the last year and now makes up 33% of total mobile use. 4G still reigns supreme at 66%, while 3G now accounts for less than 0.5% of data traffic.

“Vodafone Unwrapped shows how our customers are leading the digital charge in downloading data and connecting with each other and the world. Over the past three years, Vodafone has revolutionised its mobile network, tripling 5G coverage to over 3000 sites across 3,115 suburbs in Australia. Network use is soaring, with 5G traffic doubling in the last year, connecting three million 5G handsets,” said a Vodafone spokesperson.

“Now you can share the Vodafone’s network experience with family and friends through our new Refer a Friend offer. Our customers will be able to earn up to $250 credit towards their bill each year, while every referred friend will get a $50 credit. It’s never been a better time to experience Vodafone’s best-ever network.”

*According to the ACCC’s latest Internet Activity report: https://www.accc.gov.au/system/files/internet-activity-report-june-2023.pdf

Steve Blain, Founder of DBO Golf talks about how Business Booster has helped him help others.

Golf is a game of precision, skill, mental fortitude, and social connection, all while enjoying nature and getting some much needed physical exercise. I’ve enjoyed playing golf for many years, and over this time I noticed a number of people, especially seniors or those with a physical disability, struggling to bend over to put the tee in the ground or the ball on the tee due to limited mobility.

Around the same time, I started volunteering for the Adaptive Golf tournaments in Australia and was paired to caddy with a person who was paralysed from the waist down. He could do everything independently besides place the tee on the ground.

I observed that people often hated having to ask others to help them, and some would stop playing altogether because they did not want to play if they could not play independently.

I am an aircraft maintenance engineer by trade and had just finished a contract with Airbus at the end of 2018. Instead of looking for another contract I created DBO Golf in 2019, using the skills I’d built to start working with my wife on a device that would help golfers with limited mobility regain their independence on the course. It took us three years of engineering to come up with a device that would place the tee in the ground, at your preferred height, using screws on the handle to easily change the height of the tee, and then pick up the tee after you’ve teed off. It can even pick up golf balls and place it on to the tee, all without having to bend over. I named the device the ‘T-Up Assist’.

But creating a small business and building prototypes was expensive, so I knew I needed to find a way to make money while still having the flexibility to work on my business. In 2020, I decided to try driving with Uber because I saw that it would allow me to choose when I worked and for how long, and fit work around my life, rather than the other way around. I’ve now been driving with Uber in Brisbane for just over three years, which has given me the time and money needed to work on DBO Golf.

Toward the end of 2022, my wife and I started seeing promotions for Business Boosters, a program organised by Uber that offered driver partners and delivery people with small businesses, like me, a chance to attend business-related masterclasses and pair with a mentor that would help me learn ways to run my business successfully. The program is in partnership with Inspiring Rare Birds, an organisation committed to mentoring and educating small business owners, so I knew that it would be a great program to be part of.

Out of almost 2000 applicants, I was chosen alongside 99 other Uber driver partners and Uber Eats delivery people to participate. It was as beneficial as I thought it would be, and I learned a lot about how to achieve my goals as a small business owner. It also helped me realise just how many others there were like me, trying their best to follow their dreams and start their own business.

My mentor, Phil Ore, is fantastic. Throughout 2023, Phil has helped me understand the nuances of running my business and getting my prototypes up and running to show potential investors how they could help transform the game of golf to be more inclusive and accessible. He was readily available to me and I am grateful that this is a 12-month mentorship, which means my mentor is able to see how I apply skills learned from the program to grow my business further.

The first 12 weeks of the program is group training. I attended every workshop and submitted a video pitch at the end of the 12 weeks. Uber gave every person that completed the 12 week program a $2,000 cash grant to work on their business. My video pitch was short-listed and I was given the opportunity, alongside 9 other drivers, to attend an in-person live pitch in Sydney for a chance to win a share of $100,000. Little did I know that the judges believed in the T-Up Assist so much that I won the top prize of $50,000. That money has been a game-changer for my business, giving me the extra funding I needed to start manufacturing and inject more money into the website and promotions.

The mentorship and the grants I received from the program have helped me reach customers who need this device the most, including the man I partnered with all those years ago who, as a paraplegic, needed something that would help him gain his independence on the golf course.

However, perhaps the most important lesson I learned on this journey is that while starting a small business is an equally challenging and rewarding experience, it’s one that you don’t need to do on your own. It helped me connect with a great network of small business owners, all of whom are in the same position as me.

My message to small business owners is to take advantage of any opportunity to connect with a mentor and learn the nuances of running a small business. Apply for grants programs as they appear, because you never know when you might take home the big prize.

The Business Booster has been a great success, and Uber is running it for the second year this time. I wish all participants the best of luck, and cannot wait to hear all about it!

About Business Booster

Uber’s Business Booster Program, in partnership with Inspiring Rare Birds, is a business development program created exclusively for those earning on the Uber and Uber Eats platforms, to help them reach their small business goals. Now in its second year, the program invites 100 driven and entrepreneurial individuals living in Australia and New Zealand to participate in a series of masterclass as well as pairing them with a one-to-one bespoke mentor for 12 months and providing a cash grant at the end of the program.

American Express has embarked on a bold new strategy which will see acceptance of American Express skyrocket across Australia. Called OptBlue, the new merchant acquiring program will see thousands of small merchants onboarded to the American Express Network through two of Australia’s leading merchant acquirers, Fiserv and Tyro Payments, who are first-to-market with the new program.  

With OptBlue, small businesses will be able to process American Express transactions at a competitive rate to the other card schemes, with both acquirers providing a one-stop-shop servicing solution for all card types including a single statement and settlement process, plus a single onboarding journey and servicing contact. 

Stacey Rylands, Vice President of Merchant Acquisition for American Express Australia and New Zealand, says: “Enabling American Express Card Members to use their Cards in more places has been a top priority for some time and we have made incredible gains across industries and key locations. The launch of OptBlue in Australia is set to supercharge the scale of our merchant Network and once and for all help put an end to the question: ‘do you accept Amex?’ at the checkout.” 

“Not only is it a win for American Express Card Members, but for thousands of additional small businesses across the country set to benefit from Amex Card Members who on average, spend 3.4 times more annually than non-Card Members and 2.4 times more per purchase. At a time when small businesses are facing significant economic pressure, every high spending customer through their doors is a huge win.”  

OptBlue was first introduced in the U.S. before being implemented in Canada and Mexico, delivering successful merchant coverage growth for American Express in those markets. Today in the U.S. 99% of places that accept credit cards can accept American Express.  

In Australia, over 136,000 new places were added to the American Express Network in the last 12 months alone¹ with retail and dining seeing the highest gains.  

“The massive strides that have been made to increase American Express acceptance has completely changed the experience for our customers. Now through OptBlue, a first for American Express outside of the Americas, it will be even easier for American Express Card Members to shop small and for businesses to see the benefit”, concludes Rylands.  

Dominic White, Chief Product Officer at Tyro Payments says: “Simplifying payment acceptance with innovative solutions built for Aussie businesses has been in Tyro’s DNA for more than 20 years. We’re thrilled to be partnering with Amex to launch yet another first-to-market platform that allows thousands of Tyro merchants to accept more payments and makes it even easier for more Australians to shop locally.”  

Gavin Jones, Fiserv General Manager, Australia, New Zealand and the Pacific says: “Our clients are always looking for ways to streamline their operations, and we are committed to enabling them to do so. Fiserv has a long-standing partnership with American Express to enable acceptance of Amex Cards around the globe, and the expansion of this partnership through the OptBlue program will provide our merchant clients a better way to accept Amex Card transactions. Merchants will benefit from access to funding, reporting and billing directly with Fiserv. As a result, merchants can get paid faster for their Amex transactions and simplify reconciliation, facilitating improved cashflow and simpler reporting.” 

Once part of the American Express Network, merchants will receive access to American Express’ global marketing engine, tools and services to help them thrive including offers, promotions and, for eligible merchants, initiatives like Shop Small that are designed to help them attract more customers and reward them in more ways.  

Other key facts about American Express acceptance in Australia

• 2 in 3 Amex Card Members say that it is important that businesses accept American Express. 
• Over 1 in 3 Amex Card Members say that credit card acceptance is one of the top 3 reasons for choosing to shop at a new business. 
• 65% of Amex Card Members say they typically look on the checkout page to see whether American Express is accepted. 
• 48% of Amex Card Members say they tend to abandon in-store purchases if they can’t see that American Express is accepted. 46% for online purchases. 
• 71% of Amex Card Members say they are more likely to return a business that accepts American Express. 

Chartered Accountants ANZ (CA ANZ) believes small businesses could be in for some unforeseen pain following changes to tax collection methods made by the Federal Government as part of the MYEFO announcement.

“With more than $95 billion in tax debt to collect, it is not surprising that attention is being given to the collection of that debt,” said CA ANZ Senior Tax Advocate, Susan Franks CA.

“The ATO has announced that it will be tightening the ability of taxpayers to access payment plans. 

“Taxpayers will now need to prove they have capacity to pay the tax debt and an emphasis will be on paying the tax debt as early as possible.

“Small businesses can have difficulty accessing finance from traditional financial service providers. With the general interest charge approximating the small business interest rate charged by banks, small businesses have found it easier to apply for finance in the form of a payment plan with the ATO than a loan from a bank. This is evidenced by small business owing most of the outstanding collectible debt.

“Denying deductibility of the general interest charge will effectively increase the cost of accessing finance with the ATO and make obtaining external finance more attractive.

“The days of the ATO being the banker for small business are numbered.

“Small businesses should talk to their Chartered Accountant about their cash flow and financing to ensure that they can pay their tax on time,” Ms Franks said.

(For more detail on Denying deductions for ATO interest charges refer to page 192-193 of the Mid-Year Economic and Fiscal Outlook 2023-24)

Australia’s farm sector is approaching the end of the year with a hint of improving optimism as rural confidence levels nudge slightly higher in the latest quarter.

The Q4 Rabobank Rural Confidence Survey, released today, found net level farmer confidence across the nation edged up marginally, after having dropped to the fourth lowest level in the survey’s history in the previous quarter.

Sentiment was mixed across the nation, with Victoria, Western Australia and Tasmania reporting lower farmer confidence levels. But this was offset by an improved outlook reported by primary producers in New South Wales, South Australia and Queensland.

Overall, expectations around commodity prices were cause for optimism among those farmers with a positive outlook – particularly in the dairy and sugar sectors – while good seasonal conditions were nominated as a driver of confidence by 30 per cent of farmers expecting the agricultural economy to improve in the coming 12 months.

However, worries about the softening of commodity prices – as well as the spectre of drought, with an El Niño now declared – were also the key factors weighing on rural sentiment, for those farmers looking ahead with a pessimistic view.

The latest survey, completed last month, found 14 per cent of Australian farmers were now expecting the agricultural economy to improve in the next 12 months, up from 10 per cent with that view last quarter, while 27 per cent expected economic conditions to remain stable.

The largest percentage of farmers though (55 per cent) still anticipate economic conditions will worsen. And this had also risen (from 51 per cent the previous quarter). More farmers put down their negative outlook to softer commodity prices (64 per cent, up from 60 per cent) and worries about drought (45 per cent, was 32 per cent).

However, concerns around overseas markets/economies and rising interest rates lessened.

While commodity prices were also the dominant cause for optimism for those farmers with a positive outlook on the year ahead (nominated by 61 per cent), these producers were also hanging their hopes on a better season (30 per cent, up from 19 per cent in the previous survey). 

Rabobank group executive for Country Banking Australia, Marcel van Doremaele, said this reflected the mixed seasonal conditions experienced across the nation.

“The anticipated – and later declared – return to El Niño conditions had dampened spirits in our quarter three survey,” he said.

“Since then, climate-wise we’ve seen a range of conditions around the country with everything from severe bushfires, to damaging summer storms, to heat events, to welcome rain for some areas offset by ongoing dry conditions elsewhere,” he said.

“Western Australian, Victorian and Tasmanian farmers, in particular, are assessing the fall out of a very dry finish to spring. Many South Australian producers had a better-than-anticipated harvest result, although some did have to contend with late frosts and summer hailstorms, and now heavy early December rainfall.

“This was offset by a general lift in farmer confidence in New South Wales on the back of recent rainfall in central and northern parts of the state after a very dry run. Drought remains the chief concern in Queensland although there has been useful – albeit patchy, summer storms.”

Put together, Mr van Doremaele said, these seasonal signals had buoyed the sentiment of those fortunate enough to receive beneficial rain, but intensified concerns about a dry year ahead for others.

Lower commodity prices remain top-of-mind for livestock producers nationally, especially for beef producers, albeit with some strength returning to the market in recent weeks.

Mr van Doremaele said these seasonal and market factors had worked in tandem – compounded by increased global supply – to contribute to a forecasted drop in value of Australian agriculture production for 2023-24.

“Drier conditions during the El Niño period will impact the record-high crop production levels seen in 2022-23, and Australian crop production values are expected to fall by $12 billion in 2023–24, according to ABARES. Livestock production values are also forecast to decline, based on recent market conditions.”

States

New South Wales was one of three states this survey reporting an improvement in farmer confidence. There was increased concern about drought (although this is expected to be alleviated in the areas which received good rainfall following the survey period), but NSW farmers were optimistic that commodity prices have finally reached the bottom and are set for a turn-around.

Also holding a more optimistic outlook were South Australian farmers, as they moved away from the uncertainty of spring, got a handle on the 2023 harvest and set their hopes on an end to the downward cycle of livestock prices.

The lift in confidence was more marginal in Queensland – with the state’s farmers reporting a slight uptick in optimism, supported by hopes of a good season.  

The other three states recorded a drop in farmer confidence.

Leading the way was Tasmania, where rural sentiment fell to a survey-low level. There was heightened concern about the double-whammy of falling commodity prices and poorer weather conditions, with seasonal concerns nearly doubling from last quarter.

Victorian farmers also continue to take a more negative outlook on agribusiness conditions. Mr van Doremaele said while predictions of potentially drier seasonal conditions had contributed to the decline in sentiment among the state’s farmers, many parts of Victoria have enjoyed a good to average season. 

The decline in farmer confidence in Western Australia was found be primarily on the back of mixed seasonal conditions and lower commodity prices coming off two previous record years, and uncertainty about the future of the live export market was also weighing on the state’s rural sector.

Commodities

“Although commodity prices paired with seasonal concerns are the underlying drivers of sentiment this quarter, drilling down into individual commodities reveals the diversity of market conditions facing Australian farmers,” Mr van Doremaele said.

Confidence in the grain sector dipped this quarter, with nearly half of growers now expecting conditions to worsen (was 43 per cent).

“This is where global factors really hit home for Australian growers, as the supply-demand tussle for grains and oilseeds are better balanced than the previous two seasons, pushing prices relatively lower,” Mr van Doremaele said.  Though local grain prices remain well supported, he said.

After a tough run for Australia’s sheep producers, Mr van Doremaele said, confidence was shown to be starting to improve in the sector in the latest survey.

“We can thank rainfall events across the east coast for an improvement in markets as producers have more confidence to retain stock after a period of destocking,” he said.

“Improved feed availability prospects have increased demand pressure, especially for lighter stock. However, this price rise is expected to be tempered with the seasonal influx of stock into the market, through summer and into autumn.

“Wool producers also face a market which continues to stabilise against the bearish demand backdrop.”

The Australian beef sector experienced a shift the other way, with confidence deteriorating this quarter after considerable price decline over the course of the year, albeit with a turnaround underway since November.

While most drivers of sentiment were unchanged this quarter for beef producers, there was an increase in concern voiced about drought.

“It really is a case of ‘just add rain’,” Mr van Doremaele said. “We’ve seen the influence of producer sentiment on the market this month. Although the rain which has fallen over eastern and northern Australia over the past weeks was too late to influence beef sector confidence in the latest survey, it has corresponded to a larger jump in cattle prices – particularly young store stock.

“Hopefully this improves producer outlook, especially if there is timely follow-up rain.”

Despite strong milk prices – supported by marginally-higher production this year – dairy farmers were more pessimistic this quarter, with more than half of respondents expecting conditions to worsen.

Cotton growers were among the least optimistic this survey, with net confidence falling from five per cent last quarter well into negative territory (-38 per cent).

“Continued weakening global demand outlook for cotton, coupled with improvement in supply forecasts, have taken the spring out of the market that was seen in recent months,” Mr van Doremaele said.

Sugar growers’ sentiment improved in the quarter, primarily fuelled by positivity about high commodity prices.

Farm Sector Investment

Mr van Doremaele said the forecast drop in value of Australian agriculture production for 2023-24 will see farmers continue to tighten their belts when it comes to financial decisions.

Income expectations are down across the board with just 11 per cent of farmers surveyed expecting their incomes to increase in the coming 12 months (down from 14 per cent with that view in the previous quarter) and 66 per cent expecting their incomes to decrease (from 54 per cent last survey).

“As production values fall, so do farm incomes, and we see this play out in farmers’ investment intentions,” Mr van Doremaele said.

​While 15 per cent of respondents still intend to increase investment in their farm businesses (unchanged quarter-to-quarter), more will look to decrease investment over the next year (29 per cent, down from 22 per cent last quarter).

For those who are planning to up their investment levels, there was a move away from building on-farm infrastructure such as yards, silos and fences – dropping from 67 per cent to 52 per cent – and fewer also plan to invest in increasing labour (14 per cent, was 20 per cent).

Forecast dry conditions pumped up enthusiasm to invest in irrigation/water infrastructure – nominated by 38 per cent of farmers with an increased appetite to invest (up from 27 per cent last quarter).

“Farmers have been increasingly cautious on all spending – taking into account reduced incomes and seasonal conditions – and are focusing investment on essential activities, such as infrastructure and technologies, which will help drought-proof their businesses,” Mr van Doremaele said.

With reduced cashflow, an increasing number of farmers expect to borrow more in the coming year (30 per cent, up from 18 per cent).

This debt is earmarked for working capital, with this purpose nearly doubling from 30 per cent to 57 per cent of those farmers who are borrowing more.

Far fewer farmers are looking to invest their additional borrowings in on-farm capital (19 per cent, down from 42 per cent) and there was reduced appetite to purchase property to expand operations (14 per cent of those who are borrowing more, down from 20 per cent).

Despite another rate rise during the survey period, Australian farmers reported being less worried about rising interest rates, with only 13 per cent of those with a pessimistic outlook on the year ahead nominating interest rates as a factor of concern, compared with 17 per cent the previous quarter. A comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis. The most robust study of its type in Australia, the Rabobank Rural Confidence Survey has been conducted since 2000 by an independent research organisation.