RISING employment costs hampered business trading performance over the June quarter, according to the VECCI - Bank of Melbourne Survey of Business Trends and Prospects released today.

Wages growth was a driver of this rise, as it remained widespread in the June quarter 2015 with a net balance of 18 per cent of respondents reporting an increase. Wages growth is forecast to accelerate in the September quarter 2015, with a net balance of 30 per cent of respondents expecting a rise.

With little change in selling prices and higher operating costs, business profitability was under pressure with a visible weakening in profits over the quarter. A net balance of 18 per cent of businesses reported declines; a 10 percentage point deterioration compared to the previous quarter’s result.

Not surprisingly, the quarterly survey of nearly 500 businesses across seven major industry sectors also found that employment levels were adversely affected by the general weakness in profits and rising cost pressures. Over the June quarter, a net balance of six per cent of surveyed firms reported a decline in employment.

Exports, which had performed strongly in the previous quarter, eased in the current quarter; as did trends in buildings and structures investment. Encouragingly, a rebound in export activity is forecast over the next three months.

Sales, which were relatively flat during the June quarter, are also expected to recover over coming months.

“Cost pressures are an increasing headwind to Victorian business growth,” said VECCI Chief Executive Mark Stone.

“More must be done to reduce the employment cost burden on business by lifting the payroll tax threshold, reducing WorkCover premiums and reforming penalty rate structures.”

Bank of Melbourne Chief Executive Scott Tanner said, “While businesses are still uncertain about conditions in the Victorian economy, there were some encouraging signs for the outlook with confidence emerging.

"Stronger household and business balance sheets, coupled with low interest rates and a weaker Australian dollar, should put growth and investment plans back on the agenda for businesses when the right opportunities arise.”

The outlook for the Victorian economy weakened slightly in the June quarter, with 15 per cent of respondents anticipating improved state economic conditions in the year ahead, compared to 17 per cent in the previous quarter.

The outlook for the Australian economy mirrored results from the previous quarter, with 18 per cent of respondents expecting stronger growth over the next 12 months. 

VECCI & Bank of Melbourne partnership 
VECCI is pleased to partner with Bank of Melbourne. The bank supports VECCI’s quarterly Survey of Business Trends and Prospects, Business Leaders event series and Women in Business event series. The partnership builds on both VECCI’s and the Bank of Melbourne’s mutual goals in supporting businesses in Victoria.

Background – About VECCI
The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the most influential business organisation in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

www.vecci.org.au

Background – About Bank of Melbourne
Bank of Melbourne is investing in Melbourne and regional Victoria. Since re-launching in July 2011, the bank has tripled its workforce, opened 100 branches and become even more involved in the local community. The bank partners with the organisations and events that matter to Victorians. As a full-service bank, its team of lenders, account executives and industry specialists are supporting Victorian businesses, both large and small.

www.bankofmelbourne.com.au

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THE Australian Parliament’s Trade and Investment Growth Committee is currently undertaking an Inquiry into the Business Experience in Utilising Australia’s Free Trade Agreements.

The Inquiry is examining the experience of Australian business in using existing free trade agreements (FTAs), including any barriers that may be preventing business from realising the benefits of these FTAs.

As part of its inquiry, the committee will be holding public hearings in Melbourne on 27 July and Sydney on 28 July.

The Melbourne hearing features a range of industry associations including many representing horticulture businesses.

"Horticulture businesses are being prevented from accessing some export markets because of quarantine and phytosanitary concerns. Without market access these businesses cannot benefit from Australia’s FTAs. We need to understand why this is occurring and how these obstacles can be overcome," Chair of the Committee, Mr Ken O’Dowd said.

In Sydney, witnesses will include representatives from a range of service industries.

"Asia’s growing economies present many opportunities for Australian service industries to expand. To benefit from these opportunities we need to seek to remove any barriers to Australian foreign investment, and ensure that Australians are enabled to conduct business in key overseas markets," Mr O’Dowd said.

Melbourne
Date: Monday 27 July 2015, 9.00 am – 3.40 pm
Location: Room G6, Parliament of Victoria, Melbourne

Sydney
Date: Tuesday 28 July 2015, 9.00 am – 5.40 pm
Location: Macquarie Room, 6 Macquarie Street, Sydney

More information is available at: www.aph.gov.au/fta

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THE Victoria Tourism Industry Council (VTIC) welcomes the State Government’s announced funding for Tourism Greater Geelong and The Bellarine and its establishment as an official Regional Tourism Board (RTB).

“VTIC has consistently called on the government to recognise and provide funding for this vital organisation and we applaud this announcement,” said VTIC Chief Executive Dianne Smith.

“This is recognition of the organisation’s significance and the resultant funding will allow it to expand its efforts to grow tourism in the area.

"Greater Geelong and the Bellarine is one of the jewels in Victorian tourism’s crown and we will continue to support this organisation and local operators to grow our industry in the region.”

The announcement was made today by the Hon. John Eren MP, Minister for Tourism and Major Events, at the Victorian Tourism Conference 2015, attended by over 400 tourism leaders and proudly presented by VTIC in partnership with Tourism Victoria.

The Victoria Tourism Industry Council (VTIC) is the peak body for Victoria’s tourism and events industry, providing one united industry voice.

Tourism and events are growth industries for Victoria and contribute $19.6 billion to the state economy each year and employ more than 200,000 people.

vtic.com.au

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THE Victoria Tourism Industry Council (VTIC) has welcomed the completion of lease negotiations that will see the construction of the Mornington Peninsula’s Arthurs Seat Skylift.

“Nature-based tourism is vital for the growth of Victoria’s tourism industry and we’re delighted to see the progression of this exciting project,” said VTIC Chief Executive Dianne Smith.

The 50-year lease allows for the construction of an all-weather, all-abilities access gondola which is proposed to open in late-2016.

“It is also positive that the State Government will complement the project with $1.5 million in public space upgrades including safety, car parking and other visitor facility improvements, making the attraction more accessible for guests,” said Ms Smith. 

The Victoria Tourism Industry Council (VTIC) is the peak body for Victoria’s tourism and events industry, providing one united industry voice.

Tourism and events are growth industries for Victoria and contribute $19.6 billion to the state economy each year and employ more than 200,000 people.

vtic.com.au

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