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More than 15 per cent of Australian businesses failed in the past 12 months, the worst rate since the global financial crisis (GFC).
- New data shows that Australian business closures are at their worst rate in 15 years
- The ABS data shows half of new businesses shut down between 2019 and 2023
- The National Retail Association says the government needs to intervene
And new data from the Australian Bureau of Statistics (ABS) shows half the businesses that started in 2019 were permanently closed by June this year.
In the four years between June 2019 and June 2023, 35 per cent of all Australian businesses closed their doors for good.
The transport, postal and warehousing industry was the most vulnerable, with 64.4 per cent of businesses that opened in 2019 no longer in existence by June 2023.
Small businesses were significantly more at risk of collapse than large businesses, with the "survival rate" for new sole proprietors hovering at 41.5 per cent.
National Retail Association chief executive Greg Griffith says businesses are in an extremely difficult climate.
He says customers are spending less, but businesses are outlaying more on shipping, rates, and raw materials amid high inflation, with the ABS report containing some sobering data.
"It shines a light on how difficult it is out there in the retail sector, particularly for the smaller retail businesses," Mr Griffith said.
"They are the heart of the community and about 51 per cent of gross domestic product.
"So the exiting of some of those smaller retail businesses shows it's pretty tough out there."
The "exit rate" for businesses in the 2022/23 financial year was 15 per cent — the highest it's been since the 2008 GFC.
Queensland University of Technology business professor Gary Mortimer said many "Zombie businesses" propped up by JobKeeper during the COVID pandemic have now been struggling to stay afloat.
Professor Mortimer said small businesses were "falling by the wayside" amid a hostile post-Covid environment.
"It clearly shows as we progress out of COVID the cost of living has increased and people have pulled those purse strings closed," he said.
"While much of the narrative over the last 12-18 months has related to the cost of living and the impact on families, I think what's been missing is the impact on small businesses."
What can the government do?
Professor Mortimer has recommendations for all levels of government to ease the burden on businesses.
He suggested the "red tape" for smaller businesses be cut, including simplifying requirements for reports, levies, and starting a business in the first place.
Secondly, Professor Mortimer said governments should increasingly hire the services of small businesses instead of defaulting to larger businesses.
He said the creation of more grants to upskill business owners as well as the reduction or elimination of payroll tax, could also assist vulnerable businesses.
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