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Impact of the global financial crisis on regional Australia

CHAIR —Welcome. Although you are not required to give evidence under oath, I do need to remind you that these are formal proceedings of the parliament and should be treated with the same respect as proceedings of the House of Representatives. It is also customary for me to remind witnesses that giving false or misleading evidence before a committee a serious matter and may be regarded as a contempt of parliament. There is the warning bit at the start! It always sounds incredibly scary to me. Thank you very much for appearing before us today. It is terrific that we have a couple of chambers of commerce and industry here. We will be very pleased to hear your evidence in relation to the experience of your members, what their concerns are and what challenges they may be facing into the future—particularly suggestions you can make to this parliamentary committee as to what may be of assistance as you go forward that we may put to government. Would any of you like to make an introductory statement?

Mrs Bennett —We just wanted to say that for a while now we have been quite happy with the way things are moving. We do not feel that we have really felt an effect as such yet. If anything, long-term issues are affecting us and certainly not the current financial climate.

CHAIR —Thank you. Certainly the evidence we have had so far has suggested a fairly positive story for Tasmania. That has been quite marked in evidence this morning and yesterday. Obviously there are some concerns in some sectors. What sorts of sectors do your members represent and what experiences are they having?

Ms Clark —My chamber has about 300 members based in Launceston and outside of Launceston. Of those 300, 30 are private members—individuals—and about 270 are businesses. They range from very small businesses to quite large international businesses. For example, Rio Tinto is a member of my organisation. But, of those 270 members, about 95 would be classified as small businesses, so quite a large proportion of our membership is small business.

I would reiterate Natacha’s comments. The anecdotal feedback that we have been getting is that business is good. There are some sectors, as you said, Chair, that have been or may be affected into the future. Obviously a big concern for Launceston is the position that ACL Bearing find themselves in. I am sure some of the people who have appeared this morning have touched on their situation. Certainly, if those 270 jobs disappeared, the follow-on effects of that into our business community would be extremely damaging. But at the same time there is business that is doing well. Certainly retail has been very strong. It was strong in the lead-up to Christmas—we had feedback from retailers who had had their best Christmas ever—and quite possibly some of it can be attributed to the stimulus package. That flowed on into January and February, and even now retailers say that business is still strong.

I would like to point out that, over that December-January-February period and even coming into the onset of winter, Launceston has quite a strong events calendar. We do events pretty well. Obviously, we have AFL football here. We have things like Festivale and the Launceston Cup, and we have Agfest and Targa coming up. So I certainly think that over the last six months events and tourism have had a positive impact on this city too.

Mr McGuinness —Ours is obviously quite a different chamber in that our whole municipality is only something like 6,000 people, spread over a very large area but centring on St Helens. Tourism is obviously the major industry. We have very little manufacturing industry other than a small shipbuilder and some engineering workshops—that type of thing. Currently they are not experiencing any downturn whatsoever. Tourism is actually dramatically up and I think most people, anecdotally, would say that this was their best summer ever. We are hearing quotes of 20 per cent up on previous records.

CHAIR —We have certainly heard that in the last couple of days, which is really heartening. What have you done that is so good that other areas can hear about, or are there some external things happening as well?

Ms Clark —I certainly think the drop in the value of the Australian dollar has helped.

CHAIR —Are these mostly international tourists you are seeing, or are they domestic tourists?

Ms Clark —There is a mixture of both, probably.

Mr McGuinness —We are seeing a lot of grey nomads in recreational vehicles of all descriptions. Obviously we have a peculiar thing that has given us a spike, and that is the recognition by Lonely Planet of the Bay of Fires—St Helens being the capital, if you like.

CHAIR —What has Lonely Planet done?

Mr McGuinness —Lonely Planet, as you are probably aware, is an international magazine which focuses basically on green tourism but tourism generally. They voted the Bay of Fires as the hottest visitor destination in the world for 2009, which is a pretty big accolade.

CHAIR —That is pretty good, yes.

Mr McGuinness —The only thing is that, as chamber members, we are not entirely happy with the way it has been recognised and the way it has been handled. Our Premier has stated that it will become a national park. I do not think he has done any homework whatsoever, but that is okay. It is all good, because at least it focuses on the area, but we would like to see a whole lot more done with regard to making sure (a) that it is not spoiled and (b) that the influx of people is catered for. There are some big issues in that—that is what Natacha said. We are looking further into the future and not just at the global economic downturn.

Ms Clark —In relation to that, could I just touch on airlines and airline access into the state, which is obviously extremely important for us, as is the boat into Devonport. Two things have happened. Obviously the airline industry is being affected by what is happening around the world, so tourists and travellers get the benefit now of the cheap airfares and cheap packages which are out in the marketplace, but of concern to us—and I am sure it would be of concern to the St Helens chamber as well—would be if our levels of access were affected by what is going on. Currently we have Virgin, Tiger, Jetstar and Qantas flights coming in and out of Launceston. So we have all four carriers coming in and out of Launceston, but as things tighten for the four carriers it would be a concern if we were to be affected detrimentally. Not only does our tourism industry rely on good levels of access but so does our business community, because we certainly do business, particularly in Melbourne and Sydney, in quite a big way. I think that is something that would be extremely important going into the future.

Mr NEVILLE —If you are getting the loadings on all four airlines, that is not likely to happen, is it?

Ms Clark —One would hope that it would not happen. As I understand it, there is a lot of competition in regional Australia for routes, so our airport works very hard with our local council and Tourism Tasmania to ensure that, obviously, we maintain the routes that we have got and that there are opportunities for us to bid for new routes. But there is certainly plenty of competition out there in the rest of Australia for airlines to fly into their regions.

CHAIR —That is good news, but I want to go back a bit and focus on tourism infrastructure and some of the issues you talked about before. Just going back a little, ACL Bearing is obviously one of the areas of concern. Are there any other sectors in terms of your members that you are worried about at all? Obviously, retail is doing well, but are there components of retail that you are more concerned about than others?

Ms Clark —We have not had any feedback to that effect. As I said, local business is doing really well, but I think what is possibly going to affect us is what is happening globally, with your Rio Tintos and so on, and obviously the car manufacturing industry is being very badly affected by that. Luckily, we do not rely on manufacturing—our whole economy does not revolve around manufacturing—but certainly that seems to be the aspect that hits you in the face at this point in time.

CHAIR —Certainly. Darren.

Mr CHEESEMAN —I just have a follow-up question. In evidence earlier today, we heard about the situation facing ACL Bearing, but we also heard that the forestry industry in the region is under significant pressure. What would be the consequences if ACL Bearing and the forestry industry needed to shed significant numbers of workers? What would be the consequences for the economy and your members?

Ms Clark —I cannot quote the figures off the top of my head, but, certainly, in terms of ACL, we are looking at millions and millions of dollars going out of this economy, and obviously, in Launceston and the region, a lot of businesses are family owned or family supported, so I think the impact would be hugely significant—and 270 workers out of this marketplace is big.

Mr CHEESEMAN —It is huge, yes. I think we heard that there were 3,000 or 4,000 people tied up directly in the forestry industry, and Gunns and other buyers are scaling their percentages by 30 per cent, I think was stated. So that is going to put on pretty significant pressure, given the sheer size of that industry.

Ms Clark —I think they would already be under significant pressure. If you do work in forestry and you are a truck driver, for example, and you own your own truck—well, the bank owns your truck—there would be significant pressure because of the value of the asset that you are driving. So, if you lose a day of work, you lose the contract. Yes, it certainly hits hard.

CHAIR —Obviously, tourism and retail are great-news stories for Tasmania at the moment, which is terrific and important in balancing out some of the stories that are coming out nationally and globally, with the reality of what is happening to your members currently. What have you done in the past that has put you in this position, do you think? What has actually assisted you in getting to this position and what is going to assist you going forward?

Ms Clark —Our organisation has quite limited resources, so a lot of what we provide is support, promoting, networking referrals et cetera. But there are a couple of things that have happened recently which the chamber is supporting which are fantastic initiatives for our city and our region. I do not know whether anyone has talked you about the ‘Buy Locally’ campaign—

CHAIR —We have heard about it, yes.

Ms Clark —which the Examiner newspaper running. It is a fantastic initiative and hopefully an initiative that is here to stay. The great thing about this is that it is not ‘buy local’; it is ‘buy locally’. So it is not just about buying local produce. It is about going to St Helens for your holiday and supporting that community. It is about going to the local farmers market at Deloraine. That is still buying locally. I think it is a really smart initiative, and it seems to me that the community are getting behind it. Obviously, the focus of this initiative is to maintain jobs. Hopefully, the positive impact that might come out of this is that we create some jobs because people are supporting local business.

CHAIR —Would you like to provide those to the committee as exhibits?

Ms Clark —Yes, absolutely.

CHAIR —I will get one of the members to move that we accept those.

Mr NEVILLE —I so move.

CHAIR —As there is no objection, it is so resolved.

Ms Clark —The other thing I wanted to mention is this, and hopefully I will not get a slap over the wrist from the organising committee that I am on. I am on a committee working in partnership with Launceston City Council, the department of economic development, the chamber and a local business owner, Darren Alexander, whom Jodie knows. He is from Autech Software and Design. He runs a very successful software and design company here in Launceston. We are working on what is called Innovation Launceston. We are launching it on 14 May. Next year, in May, we are going to run five days of innovation. We are in the process of planning that, so I am not going to reveal all our secrets—sorry about that! This is a really great initiative too. We are a city of firsts. We have a region that is very vibrant and innovative. We hope that when we pull this together there will be some really positive outcomes in terms of business for our region. So they are just a couple of the initiatives that our organisation is involved in. I think the one thing that has come about because of all this is groups working together to head in the one direction and to be proactive rather than reactive. I think Tasmania, particularly northern Tasmania, is in a position where, instead of being reactive to things, we can be proactive and hopefully put some initiatives and some steps into place so if down the track we do feel the effects more strongly than what we are now we will have some answers.

CHAIR —That was terrific. Thank you, Ms Clark.

Mr McGuinness —This is going back a little bit, but I would like to add to the comments on the effects of ACL Bearing and the forestry industry gearing back. We are one of the major playgrounds for the people of Launceston and the greater northern region, and there is a lot of investment by those people in our region. I believe we would see a major effect on our area if those things were scaled back. We do feel them directly proportionally.

CHAIR —So what are you doing to buffer yourself from that?

Mrs Bennett —I am actually from the City of Melbourne. I was born—and raised—in Melbourne. I have only recently moved into a regional area. I had never lived in a regional area before. I have owned my business for a long time. I brought it over and built it up practically again over here. It is really interesting having a business when you working in a regional area and in a small town as it is only the people there that make it work. We really need a lot more support. It is really hard for businesses. You have got different personalities. You have got the same sort of people doing everything and doing the same thing all of the time. It is a lot of hard work. We need something that is there and is always going to be helping to support businesses.

Ms Clark —Further to that, something that we are hearing—and I am sure you have heard this all around the country—is that it is great, from the retailers’ point of view, for example, that the stimulus packages have gone out. I went to a breakfast which Jodie held where Craig Emerson spoke about some business initiatives, but I certainly think there could be more initiatives for business.

Mr NEVILLE —More initiatives or more knowledge of the existence of initiatives?

Ms Clark —I was just about to say that—yes, and more knowledge. It is all well and good to put out lovely pamphlets and colour brochures, but if people do not know about it then it is of no use to them.

Mr NEVILLE —You need seminars and things to explain it.

Ms Clark —I think you do. Organisations like mine or the St Helens chamber can help facilitate those. I assume you guys are like us—that is, resources to do that are limited—so you need some assistance. But knowledge is a powerful tool. If people do not know what is going on or they do not understand what benefit something can have for their business then it just falls through the hoop. I have been involved in a lot of organisations, and the one thing I have found about people is that they do not read. They have so much going on in their own business, they are a one-man show or they only have two or three employees. Life is so fast-paced these days that those sorts of things slip through the system.

Mrs Bennett —It is really important that businesses within our community all work together. That does not always happen, for different reasons. The chamber thought it was a really good idea to put together a business forum, and it turned out to be an absolutely huge event. It was so successful. The only reason it worked, though, was that we pounded the pavement and we went and talked to businesses. Businesses that do not usually attend meetings turned up. It was so successful, and everyone was just blown away. We got some really good feedback.

Mr McGuinness —We got a fantastic response.

Mrs Bennett —Yes, we got great feedback and response. That enabled us as a chamber to move on and say, ‘Okay, these are the issues that businesses have identified.’ Those were from not just members of the chamber but people outside as well. It was literally getting out there and talking to the businesses.

CHAIR —What were some of the issues that they identified?

Mrs Bennett —I can tell you: seven-day trading. We ran an exercise called the ‘brain ride’ exercise, and it really gave it some structure. Everyone came out with seven-day trading as the issue. That was the major issue. If you come to St Helens, nothing is open. You cannot get a coffee.

Mr McGuinness —In other words, you have to cater for all of these extra people who are coming in. Going one step back again, though, we have focused pretty much on tourism. I know you have probably heard this all around the country, but naturally the nuts and bolts of the community are people like tradespeople, builders et cetera. You may have heard from our local council that we have had in recent times another spike in development applications. Most of those have been fairly small. But the point is that people have had the confidence to go out and do it. I believe that is underpinned by the first home owners grant. I personally am in the business of real estate. That has been a big boost at my level. I fear that, if it is cut off in July, there will be a major breakdown in morale and it will be really major. As I said, everything is going beautifully at the moment, and that is underpinned by tourism, but I believe this is something far bigger and more general. Therefore, it is something that I guess the federal government really needs to be very mindful of.

CHAIR —The government is mindful of it, but there is a reason it has a time limit on it.

Mr McGuinness —I am sure there is.

CHAIR —Part of the reason you are seeing a spike in demand is that it has a time limit on it.

Mr NEVILLE —It is meant to stimulate, isn’t it?

CHAIR —Yes. That is its purpose.

Mr McGuinness —I am just very concerned about the after-effect.

CHAIR —Sure.

Mr NEVILLE —There are some people who say that, when the Howard government increased the grant for a new home from $7,000 to $14,000, they overheated the market and triggered the real estate boom—which we are now seeing the down side of.

Mr SULLIVAN —Caution.

Mr NEVILLE —Caution, yes. Perhaps there should be a short extension if the government were of a mind to do it but I think a long-term extension might have a negative effect.

Mr McGuinness —I hear what you say, but in Tasmania that boom was really only 2003-04 and a little bit either side. It has been good. The market has been fine. I am not a complainer.

Mr NEVILLE —It did not overheat here?

Mr McGuinness —It overheated briefly and very quickly went off the boil but did not disappear. All I believe it will do in Tasmania is just keep things ticking over.

Mr NEVILLE —How much longer do you think it needs? Three months or six months?

Mr McGuinness —Six months, by which time hopefully a few of the things that are happening in America might filter through.

Ms Clark —We were talking about business issues before. You would know that Malcolm Turnbull did a tour of the state not so long ago and held some forums on jobs. My colleagues would probably concur that red tape is a big issue for business. I know that the government is putting some steps into place to alleviate a lot of that, but at the forum I attended one business owner in particular raised the issue of superannuation and all the rigmarole you have to go through as an employer in relation to superannuation.

CHAIR —As a result of the introduction of the SuperChoice stuff?

Ms Clark —I could not say and I did not have a chance to speak to him afterwards. It is not a small business; it is a restaurant business with 30 to 40 employees, a lot of them part time. He said that his dealings with the superannuation company and all the paperwork, from a time and efficiency point of view, were quite detrimental to his business. That is just another issue, I guess, that makes it that little bit more difficult.

Mr SULLIVAN —He probably does not like paying tax either!

Ms Clark —That’s harsh.

Mr SULLIVAN —Can I ask a question?

CHAIR —Not for a minute. In relation to that, there are two things I want to alert you to, but I assume that when Craig Emerson was here you would have fed some of that specifically back to him.

Ms Clark —He was actually at that breakfast.

CHAIR —Certainly we were very conscious with the introduction of the changes around SuperChoice, which is where employees are allowed to choose their fund, that there were concerns around the generation of more paperwork, so I know Craig is well and truly across those issues, as is Nick Sherry, as the minister responsible. I also wanted to ask whether any of your members have experienced or are experiencing difficulty with the banking sector in terms of either cash flow or access to credit.

Ms Clark —Our organisation has not received any feedback to that effect. That is not to say it is not happening. Geoff Fader, who is the President of the Tasmanian Small Business Council, might be worth asking about that because I certainly think some of his members have provided feedback in relation to that, but our organisation has not received any feedback.

Mrs Bennett —As a committee we have not had any feedback, but I am in bookkeeping and business consulting, so I have certainly had some feedback from some clients that it is getting difficult.

CHAIR —If you do have any evidence of that occurring—I suspect Craig would have brought this up at the forum—there is a clearing house for specific cases run through Craig Emerson’s office. I think they are very interested if there is evidence of banks behaving in that way towards small business. We are very keen to get the details, and how they may operate a bit more amenably to small business will then be discussed with the major banks.

Mr NEVILLE —He could run some workshops to flush that out and do some focus groups with your small businesses to see if there is a problem. I think what the chair is saying is terribly important.

CHAIR —WIN Television have arrived, so I alert you to the fact that there is a camera. If anyone objects to being filmed, please let the camera operator know.

Mr NEVILLE —Do you need a resolution to have them here?

CHAIR —I do not think so.

Mr SULLIVAN —I would like to put what is more of a request to you, Mrs Bennett, rather than a question that will put you on the spot. What I am really attracted to is the experience you alluded to of shifting an existing business into a small regional area recently and the fact that that presented you with some problems. You may be able to give us a bit of an overview on that, because that is an important aspect, but can I request that you also provide us with a paper on it after you have gone home and thought about it and have some time.

Mrs Bennett —Absolutely. Working in the city and working in a regional area are very different. I found that, while I was in the city, I never advertised my business but I was always quite busy. I have found since I moved to Tasmania—we live in Scamander but my business is based in St Helens—that it is more who you know, not what you know. I think that is based on the fact—and it might be different in the bigger cities like Launceston and Hobart—that you are coming into a new area and people just do not know you. It is very cliquey in business in a small community, and that is what I have found being the president of the chamber and trying to organise different events and get businesses working together. It is really hard—people have issues; not everyone gets along. My business is doing extremely well now and I have managed to employ two people in 2½ years. There is a way around it. I think I have been able to build it up because of the industry I am in and my knowledge.

CHAIR —From the experience you have had, what sort of support do you think is needed? It may not necessarily be a federal responsibility, but what sort of support would encourage people from metropolitan areas to move their businesses into regional areas and, if they do, what support is needed to keep them there?

Mrs Bennett —I joined the chamber pretty much as soon as I moved because I thought it would be very instrumental, and it absolutely was. Through it, I was exposed to the different businesses and the different people within the community, but a lot of people do not know about that—they do not know about the chamber. We also have a local BEC where you can get a wealth of information. But at the moment we are really stuck in a place where there is a lot of information and a lot of seminars are being held but people are just not getting there. I think that is partly because sometimes we need outsiders to come in and hold these seminars because sometimes people do not like listening to locals or people have issues.

Ms CAMPBELL —This is a question to both chambers: what is the percentage of new businesses that you know have started up? I know that particularly in Launceston I have been to a few openings of new businesses. Do you have any stats, Lou?

Ms Clark —No stats, Jodie, but I am sure we could get some information on that.

Ms CAMPBELL —Over the period since there has been a lot of talk about the GFC, have you noticed that new businesses are still opening up?

Ms Clark —Yes, they are. If we are just talking about the Launceston CBD, we have had a couple of businesses close down, but they would have closed anyway; they did not close as a result of what is happening globally. In the past couple of weeks we have had maybe three or four new businesses open up. They are small businesses. There is quite a large vacant premises in Charles Street which is about to open up with a new menswear store. So, although we read a lot of doom and gloom about what is going on, there are opportunities there and people are finding those opportunities and taking advantage of them. Yes, we have had businesses close, but we have certainly had businesses open—and they are perhaps businesses which are a little bit different, a little bit innovative.

Mr McGuinness —St Helens over the past seven years has grown exponentially, as you probably would be aware, but we were very poorly served in, say, the restaurant area up until recently. We have gone from virtually just the pubs and clubs to three a la carte, quite high-quality restaurants opening this summer, all of which have experienced fantastic turnover, plus there is another one in Scamander. For a small area that is very significant.

Ms CAMPBELL —Just for the record, Glenn, I did holiday at the Bay of Fires—so there you go!

Mr McGuinness —I know, I have seen you. A good local member holidays at home.

Mr CHEESEMAN —I have enjoyed the evidence that you have given about the first home buyers grant and also the cash bonuses that are flowing into the economy at the moment. I am curious about what strategies or mechanisms you might put in place to take advantage of the broadband announcement last week, that Tasmania will lead the nation, and also in terms of the schools package, which will be in the vicinity of perhaps $40 million or $50 million for this region—what strategies you will be putting in place to ensure that local builders and contractors get that work, as opposed to builders and contractors from the mainland.

Ms Clark —One of the things we would be doing is encouraging people to not just buy locally but use local contractors. Again, I guess it is a little bit difficult for my organisation, because really I am a disseminator of information. That would be the first thing that I would be doing—trying to get the information out to my members in as much detail as I can but also in a way that means they can act on it quickly. I would become an information hub for that sort of thing, basically. In terms of actually being able to implement some sort of strategy, I do not have the resources to do that, so I would be working with other organisations to help facilitate that.

Mr CHEESEMAN —And how important will the Broadband Network be for growing and nurturing this economy?

Mrs Bennett —I think it will be very important. I know there are a few people who live down the coast who rely on it quite heavily and it is hindering them, so they do go away a lot. But I think if that is implemented down the coast they will be more inclined to stay longer and maybe stay permanently and then put their dollars back into our community.

Ms Clark —I think in terms of business it would have to be a positive, so long as it is rolled out in a quick and timely manner.

CHAIR —As there are no more questions, thank you very much for appearing before the committee and for your evidence today. You will receive a proof transcript to which you can make editorial changes only. The committee may have some further questions when we read through the transcript, so we may write to you about that and, hopefully, you will be amenable to that. If you did wish to put in a formal submission to the inquiry, you would be most welcome. Whilst the cut-off date has passed, we do always welcome it when witnesses go away and then think of other things they would like to put to us. Thank you again.

[11.45 am]