Business Chamber Queensland Pulse Data: Operating and labour costs reach record high as confidence falls » Business Chamber Queensland
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Business Chamber Queensland Pulse Data: Operating and labour costs reach record high as confidence falls

By Emma Clarke

23/8/2023

Business operating and labour costs are at record highs while the compounding impact of reduced consumer spending and workforce challenges put pressure on businesses’ bottom line, new Business Chamber Queensland data shows.

Out today, the Pulse Report of Queensland business conditions for the June quarter shows interest rates, level of demand and economic activity, workforce challenges and wage costs, as well as insurance premiums, are the most significant constraints on business growth.

Business Chamber Queensland CEO Heidi Cooper said it meant businesses had weak confidence in the future of both the state and national economies.

“Businesses are facing the combined impact of high operating costs, high labour and insurance costs, high interest rates and reduced consumer spending which mean they’re less optimistic in the state and nation’s economic future. We’ve been seeing these macroeconomic challenges impact business confidence for the past year,” Ms Cooper said.

“Interest rates impact businesses both directly and indirectly. Many businesses have their own debts to service while consumer spending is reduced. We saw this with level of demand and economic activity and interest rates both rank in the top five constraints on business growth.

“The cost pressures families are seeing around the kitchen table are the same as the cost pressures we’re seeing around the business table.”

More than seven in 10 businesses reported wage costs increased in the June quarter while more than eight in 10 said operating costs also increased in the same period.

Business Chamber Queensland’s Pulse Survey has measured Queensland business confidence and expectations for more than 20 years. 

The Pulse Survey is the most authoritative, timely and comprehensive snapshot of Queensland business sentiment, providing critical insights into the opinions of business owners across the state. 

Pulse includes detailed measurements on employment levels, turnover and business profitability.

Ms Cooper said workforce challenges were the most significant constraint on business growth and had been for more than a year.

“We’re seeing this combined with record high labour costs in the June quarter, demonstrating the on-going skilled labour crisis impacting businesses across the state,” Ms Cooper said.

“Despite this, we saw a slight improvement in general business conditions and sales and revenue, although both are at weak levels.

“Businesses don’t expect much to change in the next three months with general business conditions expected to fall slightly.”

Ms Cooper said it was important businesses were able to plan for the future with confidence.

“We’re working to ensure Queensland businesses are supported to manage day-to-day and thrive long term,” Ms Cooper said.

“For example, through our ecoBiz program, our sustainability team can help businesses save money and increase efficiencies on water, waste and energy. Some businesses report their power bills halving when they implement recommendations.

“But there is still work to do and we continue to advocate on behalf of the state’s business community to ensure their needs are front and centre and businesses have the support, tools and resources they need today and in the future.”

Business costs increase as beer flows

Nindigully Pub owner Steve Burns is facing increases in wage and workforce costs, insurance, gas and beer tax.

“Wage costs are one of the biggest impacts in this business. Business like ours suffer immensely when payroll costs are so high,” he said.

“We have 11 employees we need to keep in a job, some weeks are busier than others are some are very quiet.”

Steve said he invested in solar battery storage to reduce power costs but other resources like gas remained costly to the business. At the same time, a twice-yearly tax increase on beer puts pressure on the cost of a drink at the bar.

Steve said the cost added up as the drinks flowed. He said flood insurance for the pub, on the banks of the Moonie River, was inaccessible while other insurance costs were ‘through the roof’.

First opened in 1864, Nindigully Pub, at Thallon, is 700km west of Brisbane. The town’s population is entirely the pub’s workforce while about 50 other people live within a 50km radius. The business is mostly reliant on the domestic tourism market while at the mercy of natural disaster and the weather.

In busy periods, the kitchen uses three quarters of a ton of beef and half a ton of chicken within a couple of weeks while the bar empties more than 100 kegs of beer in the same period.

Steve and wife Debbie (pictured) bought the pub 21 years ago. Debbie passed away in 2021 while Steve has stayed on at the business.

He said despite the challenges, the local community and domestic tourism gave him confidence. The business witnessed a 10 to 20% increase in tourism month on month over the past year.

“The Australian people are still supporting country businesses, they love a bush pub and the atmosphere we have created here. It’s really encouraging.

“The local community is 100% supportive of us all year round and very important to the business. We’re a pub in the middle of nowhere, we don’t have the luxury of being in the city with hundreds of customers every day.

“We need to continue to invest to meet domestic tourism demand and will need a bigger kitchen and more seating to keep ahead of the crowd. The base of this business is good food, cold beer and good hospitality.

“It’s an emotional business rather than a financial return business. I’m not selling, I will continue to run it. I’m happy here. The business of Nindigully Pub will survive.”

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