Greg Evans, ACCI director of economics and industry policy. PHOTO: ACCI

The July 2011 Australian Chamber of Commerce and Industry (ACCI) survey of investor confidence highlights that mainstream Australian businesses continue to face significant upward pressure on production costs and downward pressure on selling prices, which has put a significant squeeze on profit margins and business viability.

The survey reports that all actual and expected business indicators fell over the June quarter, except the expected wages growth index, amid the prospect of rising interest rates and taxes, escalating global concerns and uncertainties, the appreciation of the Australian dollar and weak consumer sentiment.

"It is alarming that actual business conditions fell to levels not seen since the survey began in 1998 and many of the expectation indicators declined to the lowest levels since the June 2009 quarter," says Greg Evans, director of economics and industry policy.  

"In the current weak trading environment, businesses continue to face the presence of high interest rates, an appreciating dollar and soft consumer demand. More exposed businesses will find it increasingly difficult to cope with further cost imposts including the proposed carbon tax and the prospect of rising interest rates.

"Finally, the flood levy which is operable from 1 July represents the first increase in income tax in 15 years and this will further hamper sentiment and spending amongst taxpayers earning above $50,000 per annum."