GFC2 crashes on the Sunshine Coast
Thu 22 July 2010
Kerrie De Clara, Post Graduate Diploma of Journalism
Sunshine Coast small businesses have relied on their resources to survive the Global Financial Crisis (GFC), but accumulated debt has taken its toll.
Small business represents 96 per cent of Sunshine Coast companies, so economic recovery of the sector is vital for the region.
The Australian Bureau of Statistics reported a 15 per cent increase in the cost of living since the GFC, which also added significant pressure to small businesses.
The optimism of Sunshine Coast business has been swamped by what is fast becoming known as the second wave of the GFC (GFC2).
The Sunshine Coast Regional Council recently conducted The Sunshine Coast Business Confidence Survey, which showed confidence had lowered in the past six months.
The council established the partially-funded government initiative Sunshine Coast Enterprises to address the impact of the current economic climate on small businesses.
Sunshine Coast Enterprises CEO Gerrie Carr-Macfie said they consistently liaised with the Chamber of Commerce to check the pulse of the Coast economy.
“Small business prior to the GFC was booming on the Coast, but the impact of the GFC has left a very slow recovery,” Ms Carr-Macfie said.
“At the moment we are hurting…I won’t deny that.”
Macquarie University associate professor of economics Elizabeth Sheedy said the GFC2 seemed to be hitting Queensland more than other states.
“The economy outside of Queensland is not so much driven by construction and tourism,” Associate Prof Sheedy said.
“My impression is it is localised, even to the Sunshine Coast…the economy is more steady elsewhere.”
The Reserve Bank of Australia (RBA) increased interest rates six times from October, 2009 to May, 2010, with the standing cash rate of 4.5 per cent being the highest since November, 2008.
Increased interest rates usually indicate a positive financial position to international investors.
However, National Australia Bank Maroochydore partner Jo Knight said the RBA increase did not necessarily suggest an optimistic climate in the local business arena.
“The Global Financial Crisis caused cash flow restraints on businesses, and the financial climate hasn’t returned to what is was,” Ms Knight said.
The multi-national company Design Landscapes Pty Ltd shocked local businesses with the recent liquidation of its Sunshine Coast division, which left employees without pay and resulted in a domino effect on sub-contractors.
Burke and Wills Electrical managing director Brian Burke said they were dependent on the incremental contract payments.
“We were due payment of $75,000 that was never received,” Mr Burke said.
“The working capital just isn’t there anymore.”
Westfield Queensland regional general manager Colin Quigley said Australia had 15 years of a good financial climate, so businesses should be prepared for such a situation.
“It‘s fine to take risks, but the risk has to be manageable,” Mr Quigley said.
“If you have 90 per cent debt, you can’t blame the GFC or anything else for causing your business to go under.”
Mr Quigley believed the key to a successful business in the current economic climate was to manage the outgoings, and trade within set boundaries.
“If you have debt, you’re gone,” Mr Quigley said.
Ms Carr-Macfie said a cohesive effort between Sunshine Coast Enterprises and the local council had developed a strong business strategy designed to assist small businesses.
“The long term outlook for Coast business is positive provided we manage things better,” Ms Carr-Macfie said.
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