Small business facing difficult conditions, says ACCI

The ACCI says the confidence of smaller operators may be eroded further by disappointment at the federal budget's failure to deliver company tax cuts.

The chamber's small-business survey for the March quarter, released on Tuesday, found some improvement in overall business conditions, although most components remained at contractionary levels.

"Small business conditions continue to be very difficult," the chamber's director of economics and industry policy Greg Evans told reporters in Canberra.

The survey index for small-business conditions was 42.2 points in the March quarter, up from 41.8 points in the previous three months, but still below the 50 level that separates expansion from contraction.

Conditions are expected to improve modestly in the June quarter to 45.9 points.

Components such as selling prices, profitability and investment remain notably weak.

Business taxes and government charges are seen as the biggest constraint on business, followed by labour costs and insufficient retained earnings.

Evans said the European situation continued to be negative for business, especially as it was having an impact on superannuation account balances and, in turn, consumer confidence.

There was a strong realisation among small businesses they would be among the "biggest losers" from the carbon tax because there was no compensation.

As well, the impost was likely to have a significant detrimental impact on overall consumer sentiment.

Another concern was political instability and recent scandals.

"It is clearly a distraction," Evans said.

"Small-business people would expect the government to be dealing with the mainstream economic issues and issues that affect their aspirations and concerns going about their business."

The current environment opened the way for further interest cuts, he said.

"(But) interest rate cuts are certainly not a sign of a robust domestic environment," Evans said.