After several flat quarters, South Australian business sentiment has nudged higher – but it’s arriving alongside a different kind of pressure. As inflation has reduced, it’s much harder to pass cost increases through to customers, while overheads and wages continue to increase.
When inflation was running hotter, price rises were easier to justify. Now inflation has cooled and customers are pushing back. The result is a tight squeeze on margins and a sharper look at costs and productivity.
Across many sectors, particularly those selling to households feeling the cost-of-living strain, firms report that straightforward price increases aren’t sticking. Business-to-business suppliers can sometimes adjust more easily, but even there, buyers are taking a harder line. The playbook is shifting from pricing to productivity.
Too many small to mid-sized firms live off the P&L and cash balance and often only glance at what creates those dollars. It’s important to focus on the drivers, not just the dollars. Pick one output metric that truly drives revenue and track it, pairing it with a controllable input to show cause and effect.
That discipline underpins a focus on productivity. It also helps owners decide which customers and jobs deserve priority. Selectivity matters. If a customer consistently absorbs admin, squeezes your timeline and leaves no margin, that’s a signal.
One data point that stood out in this quarter’s survey was a fall in overtime. This is conscious cost control rather than a simple easing in labour shortages.
Overtime is expensive and it brings risks around safety, quality and burnout. We’ve seen our clients set hard guard rails: minimise overtime, even if that means walking away from marginal jobs. Better to forego low-return revenue than carry extra cost and risk for very little gain.
That shift ties to a broader change in mindset. When prices were increasing, maintaining throughput at all costs made more sense. Today, with demand more variable and customers cost-sensitive, businesses are pruning unprofitable work and focusing on repeatable margin.
On tax, the message from this quarter’s responses is consistent with the conversations William Buck is having daily: before talk of raising or reshaping taxes, businesses want government to demonstrate better spending discipline.
Payroll tax remains the most disliked impost in the SME space — on cost, complexity and principle. It feels counter-intuitive to tax employment. Thresholds, rates and definitions differ by state; indexation lags create de facto bracket creep; and the admin burden is real. Uniform settings and sensible thresholds would remove a lot of friction.
