Skills shortages are killing Canberran small businesses
In May 2021, fed up with the ongoing lack of support for small business in the ACT, I sent letters to Federal and Local Government. In those letters I detailed how the worsening skills and labour shortages was severely impacting small businesses in the ACT. All reports at that time blamed the COVID pandemic. However, the reality was that the skills shortages in Australia was already an ongoing issue for small and large business and had been for years. COVID had merely exacerbated the issue and forced it into the collective consciousness of all Australians, as struggling businesses desperately tried to keep their heads above water.
On October 21, 2021, the Canberra Times ran an article: Chief Minister Andrew Barr says Canberra businesses need to step up to attract workers to the ACT
In this article, Minister Barr says "It's businesses that need to step up at this point to both attract new workers by offering competitive wages, salaries and conditions and its businesses that need to retain their existing workforce.”
"And if there are better employers in Sydney or Melbourne who pay more and who look after their staff and who value them better than the equivalent employers in Canberra, the Canberra employers will miss out."
As a small business owner, I felt rage as I read this. It struck me that the Chief Minister was completely out of touch on the realities of running a small business in the ACT. Small businesses in the ACT have done so much heavy lifting they are collapsing.
Attracting and retaining staff in the ACT is one of the biggest challenges business owners have been battling. In fact, it’s an issue that’s consistently featured as a top priority in policy strategy by the ACT Government since well before Minister Barr’s appointment in 2014. You can find an ACT Government strategy for attracting skilled health professionals dating back to 2006. So, it made no sense why the Chief Minister would openly contradict his own party’s policies.
When a region has a reduced skilled workforce the impacts on a business’s productivity and growth are significant. For years businesses in the ACT have had to pay unsustainably high wages to attract and retain staff. Many employ underqualified or inexperienced staff because there’s no other option. The qualified and skilled workers on the other hand, have the pick of the crop when it comes to jobs and they tend to bounce from company to company chasing the highest wage. With the current cost of living pressures, wages are now the biggest draw card for employees and understandably so. However, this has forced small businesses to compete against each other, again driving up the wages paid to retain staff.
The costs associated with running a business in the ACT is another problem. One of the biggest costs is workers compensation insurance, of which ACT businesses pay the highest premiums in the nation. Add electricity, water, rents, payroll tax, regulatory costs and operational costs are through the roof. As a result, businesses cannot remain competitive in the ACT market, not when they’re competing against interstate service suppliers. Currently fifty per cent of small businesses aren’t even breaking even.
The Federal Government’s response to address the skills and labour shortage was to raise caps on visa numbers as a short-term solution and to increase funding for skills training the long-term solution.
The problem with the short-term solution is the skilled migration sponsorship process is a long, complex and laborious one for all parties involved. It’s also very expensive. On top of the nomination and application fees, businesses are charged a Skilling Australian Fund levy. This equates to between $1200 - $1800 for every year that you sponsor a worker. That money is collected by the Department of Home Affairs and managed by the Department of Employment and Workplace relations. This money is then divided up like prize money amongst the State and Territory governments providing they can demonstrate that their programs and initiatives increase participation rates in skills training. The ACT has been receiving between $1.6M to $5.7M since the inception of the SAF in 2018. Obviously investing in programs and incentives that increase participation rates is a great thing. However, what we’re not talking about is the current completion rates for apprenticeships and traineeships. These are only sitting at just above fifty per cent. This means the hard-earned money that small businesses make is funding programs in the ACT that are not delivering the outcomes needed to secure a skilled labour resource into the future.
So back to heavy lifting. Is it any wonder why ACT small businesses are closing their doors in droves? Minister Barr, I would argue that it’s about time for the ACT Government to do their fair share of the heavy lifting because by God, small businesses have done enough.