After the Royal Commission into small business lending policies went under scrutiny last year, and a report was released, confidence in owning and managing a small business has fallen considerably.
According to Trade Economics the NAB Business Confidence Index fell to 3 in November 2018.
The Index rates the current level of business conditions in Australia as changes in business sentiment can be an early signal of future economic activity such as spending, hiring, and investment.
It was the weakest reading since January 2016 and the second straight month that the index was below its long run-average of 6.
The North West Star spoke to John Tully from City and Country Realty about small business confidence in Mount Isa.
“It’s the key. If you don’t have confidence in the system, the town and yourself, then purchasing or selling a small business won’t happen,” Mr Tully said.
On average, City and Country Realty, lists three business properties a year, but Mr Tully said since the Royal Commission, the lending criteria had become very tough for people wanting to purchase.
“Banks have tightened up and some require a minimum of 30 per cent deposit,” he said.
“Whereas the requirement for a home loan is around five to 10 per cent.
“These are elements we can’t control that affect confidence in buying and selling in Mount Isa.”
“Buying an existing small business could be easier than setting up a new one, but there are issues to consider for both.
“Businesses that can maintain clientele may have a higher success rate but like any endeavour the success rests upon hard work, due diligence and confidence.
“There are a lot of issues that are against starting a business, and the biggest is uncertainty. If people in town aren’t confident when it comes to their jobs, then the market becomes stagnant,” he said.
There are a lot of issues that are against starting a business, and the biggest is uncertainty. If people in town aren’t confident when it comes to their jobs, then the market becomes stagnant.John Tully
In November last year Glencore hosted a mining forum where the company introduced the community to a new way of mining, to boost confidence in life of mine.
Chief Operations Officer Copper Assets Australia for Glencore, Mike Westerman had said sublevel cave mining was half the cost of the current mining method.
“The important thing, is that we make investments to prolong the life of the mine,” he said.
Glencore is the biggest employer, however Mr Tully said Mount Isa was not just a mining town anymore.
“Local and Federal governments need to start thinking about other avenues like the water pipeline, horticulture, the rail system across to Tennant Creek and making Mount Isa the hub centre of North Queensland, all are factors in building confidence.”
Mount Isa had an estimated residential population of 21,998 people according to the 2016 Australian Bureau of Statistics which Mr Tully says if it can be maintained will boost confidence in property sales.
A diverse range of commercial properties are available for inspection at Mount Isa and Cloncurry. The most recent addition to the market was Harrison’s Book Country. Others include Camooweal Butchery, Sav’s Takeaway, First and Last and the Copper Gate Motel.