The survey of over 100 mid-tier business leaders found more than half (54 per cent) were confident about growth prospects for the rest of 2022 and the next three years, with more than a quarter (26 per cent) predicting growth of 10 per cent or more.
On wages, 44 per cent of leaders believed wage growth would be between 4-8 per cent, with a small number predicting rises of more than 8 per cent.
Increased competition for talent appears to have had a direct bearing on these wage forecasts, with more than two-thirds (69 per cent) saying recruiting and retaining talented staff was their biggest challenge.
Clive Bird, KPMG Enterprise tax leader, said while steady wage growth is encouraging it may introduce cost pressures for business.
Cost and margin pressures (56 per cent) and supply chain disruption (41 per cent) were the second and third-biggest issues facing business leaders. In the corresponding KPMG Enterprise survey, a year ago, these were the top two challenges, with staff recruitment only third – showing the rise of the talent issue in Australia over the past 12 months.
Almost all business leaders surveyed expected interest rates to rise in 2022, and a large majority (71 per cent) felt their debt levels were low enough to be manageable. More than a quarter (26 per cent) acknowledged that an interest rate hike would impact their business and its profitability.
In terms of macro-economics, the overwhelming majority believed it was time for the federal government to start repaying debts, with two-thirds nominating economic growth and increased productivity as their preferred way to achieve this.
If taxes have to rise, then the best way to do this was via a GST increase, business leaders said. But a sizeable minority (28 per cent) said tax rises should be avoided if at all possible. The vast majority (93 per cent) said the budget should include tax measures to help boost growth in the mid-market sector, with 61 per cent calling for major tax reform. Re-establishing critical manufacturing and greater investment in training programs to address the skills shortage were also priorities.
“It is pleasing to see that there is support from business leaders for retaining the Instant Asset Write-off over the long-term, increasing access to R&D Tax Incentives and innovation and start up tax incentives, for example,” Mr Bird said.
“These are the sort of measures that support growth and business activity in the mid-tier market. It is clear that while businesses accept that government debt repayment has to come, tax rises are still not their preferred way of doing this. Measures to increase growth and productivity are favoured.
“But if there is no option but to increase taxes, then GST is the most palatable to business leaders, given Australia’s long-standing over-reliance on direct taxes. While most respondents believed some form of tax reform was necessary, there is very little support for other tax increases.
“Measures such as reducing superannuation, capital gains tax or negative gearing concessions received support of just 16 per cent. A similar lack of support was found for increasing company tax (13 per cent), for reducing access to franking credits (6 per cent), or for increasing personal tax, land tax or stamp duty. Business leaders show a clear and consistent view here.”
One contentious issue raised by the survey is the increasing ATO compliance activity aimed at the enterprise sector. Sixty per cent of respondents said they were concerned about this, with many feeling they need more time to recover from the COVID issues of the past two years before handling the cost and disruption of tax audits.
