As Western Australia’s retail and hospitality industries emerge battered and bruised from one storm, another is quickly brewing.
- Businesses are battling increasing cost pressures
- Retailers are worried people will have less to spend
- The CCI says it’s more difficult than ever to run a business
COVID-19 cases and restrictions in the state are falling as the virus starts to become an afterthought for many.
But now those businesses that made it through the last two years are facing an uphill battle against soaring cost of living pressures – which by some measures are being felt particularly hard in the west.
Among them is Dylan Weiner, who has owned his vegetarian restaurant just off the Beaufort Street strip in Mt Lawley for more than a decade.
“Everything’s going up. Oil’s going up, tomatoes are going up, apples are going up,” he said.
“It’s trying to reduce putting your prices up to keep the customers happy as well.
“So it’s just a whole big juggling act.”
Gift shop owner worries about future
News of a big interest rate hike earlier this week, and the expectation of more on the horizon, is placing significant pressure on people’s already stretched budgets.
According to federal Treasurer Jim Chalmers, the average new mortgage in Perth is worth around $471,000, meaning payments are set to increase by about $128 a month.
Combined with rising inflation, which in WA sat at 7.6 per cent at last count, any money left over after paying rent or mortgages is buying less and less.
And that leaves Beth Taylor worried about whether customers will still be keen to spend at her Maylands gift store.
“You’ve got to have the essentials … [you’ve] got to feed your children and look after yourself before you actually come and buy beautiful things, which is what we deal in the most.”
Difficulties of doing business
WA Chamber of Commerce and Industry chief economist Aaron Morey said businesses had described the current situation as a “profitless boom”.
“The difficulties of doing business have never been greater,” he said.
“We’ve got a lot of businesses in this state where revenue is up but costs are just going through the roof.
“So these interest rate increases are going to just increase that pressure on those small businesses in particular.”
Mr Morey said that pain would only grow as rates continue to rise.
“Many households have built up those savings buffers and that will help protect them, particularly with their higher mortgage repayments,” he said.
“But that may come at the expense of some of that retail spending.”
Call for more household support
When Premier Mark McGowan handed down his budget last month, he highlighted two key measures to tackle cost of living pressures: a $400 credit on household power bills and increases in household fees and charges that were lower than inflation.
But in the wake of rising interest rates, shadow treasurer Steve Thomas yesterday accused Mr McGowan of being “addicted to his economic reputation”.
“[The government] certainly have got massive surpluses, but they’re not using it for the people, for the benefit of business or for the benefit of households,” he said.
Dr Thomas called for the government to consider freezing household fees and charges, which he estimated would cost less than $200 million.
In a statement, a state government spokesperson said the government was continuing to deliver “significant cost of living support for households”.
“Which includes the recent $400 household electricity credit, the two-zone fare cap on Transperth fares and providing 15 free rapid antigen tests to support households during the pandemic.
“The $400 electricity credit will roll out from July, helping ease household pressures at the right time, during the current temporary spike in inflation.”
Dr Thomas also wants a review of the government’s public sector wages policy.
Mr McGowan has previously dismissed that idea, saying the current policy delivers an effective pay rise of more than 4 per cent for low-paid workers.
Businesses stay positive
Even with another challenging period ahead, Mr Weiner was hopeful people would do what they could to support small business.
“Just keep heading out, keep supporting us,” was his message to customers.
“We’ll keep working with you. Together we’ll get through this and it’s onwards and upwards.”
Surrounded by the wares of dozens of local artists, Ms Taylor held similar hopes.
“If it sparks joy then that’s a good thing. It can’t all be bad,” she said.
“And when you do come and support us, you’re supporting all your local people, which is fabulous.”