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As the new financial year begins, the Housing Industry Association (HIA) has flagged a range of pressures on cash flow and compliance that could hamstring some SMEs, including increases to the minimum wage, the introduction of Payday Super, and anti-money laundering regulations, as well as taxation changes and enhancements to paid parental leave.
“HIA warns that while each reform may be well-intentioned in isolation, their cumulative impact risks dampening productivity growth, increasing compliance burdens, and constraining business investment at a critical time for the economy,” Simon Croft, HIA’s CEO of industry and policy, said.
“The breadth of changes taking effect simultaneously means businesses must adapt across multiple fronts from workforce costs and financial compliance to environmental approvals and administrative obligations.
“It’s the layering effect acting simultaneously, which results in businesses diverting time, capital, and effort away from productive activity.”
All eyes on cash flow
It has been modelled that the Payday Super reforms, which require employers to pay employees’ 12 per cent superannuation guarantee at the same time as wages, could reduce SME borrowing power by as much as 15 per cent.
Brokers have also said the reforms could trigger a structural shift in how SMEs manage cash flow and access credit.
The changes come as many businesses are already grappling with fuel spikes, rising input costs, subdued consumer demand, and an uncertain economic outlook, placing an even greater emphasis on cash flow.
That pressure is already beginning to show. Credit reporting agency CreditorWatch has said that payment arrears among SMEs have hit a six-year high.
Meanwhile, brokers have told Broker Daily they are seeing increased demand for overdraft and line-of-credit facilities as businesses look to shore up their cash flow and liquidity.
Impact on supply
The housing industry is also not isolated from these pressures, HIA said.
Croft said the added pressure on the housing market could slow housing development as businesses shifted their time and resources to meet the new requirements.
“The growing regulatory burden is also undermining efforts to meet Australia’s housing supply targets. We are now two years into the National Housing Accord, and with each month that passes, the target of 1.2 million new homes is drifting further out of reach,” Croft said.
“The compounding nature of these reforms are making the task harder for builders to get on site and build the homes Australians need. Instead of focusing on delivery, too many are being forced to navigate a continually changing regulatory landscape.”
Croft said the combination of changes would hit smaller businesses the hardest, as they are less able to absorb the added compliance burden.
“HIA is calling for governments to adopt a more co-ordinated, whole-of-system approach to reform design and implementation, which includes better sequencing of reforms to avoid regulatory overlap, greater assessment of cumulative impacts on business and transitional pathways to support compliance,” Croft said.
[Related: National home values flatline as prices stall across capitals]
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