Support for the Federal Government has spiked among small and medium business owners following the May Budget, climbing 26 points to +18, according to the latest Sensis Business Index (SBI) survey.
Businesses saying Federal Government policies are supportive almost doubled (16% to 30%), while those saying policies work against small business halved (24% to 12%), leading to the 26 point turn around on a net basis.
Dramatic improvements in support for the Federal Government were seen in the NT (+43), the ACT (+42) and SA (+42), with the NT now the most supportive region, while Tasmania is the least supportive (+8).
Sensis Chief Executive Officer, John Allan said: "Six times as many businesses thought the Budget will benefit their business as those who thought it will have a negative influence. There was a dramatic shift in opinions toward the Federal Government with those surveyed saying tax incentives, depreciation benefits and tax cuts will help their business."
The Index, which reflects the views of 1,000 small and medium businesses, revealed business confidence increased by four points to +31 points for the quarter, up from +12 a year ago.
In terms of perceptions of the economy there was an improvement of eight points, however twice as many businesses still believe the economy is slowing rather than growing (28% versus 13%).
"On a net basis confident businesses are three times more likely to back the Federal Government’s policies, at 24 points versus only eight points for worried business, suggesting a link between the lift in business confidence and the May budget," said Mr Allan.
"Lack of work or sales remains the key concern, mentioned by 15 percent of businesses and is even more of a concern in the building and construction sector. Of those who reported barriers to taking on new employees, more than half cited this as a key reason.
"The economic climate remains a major concern for seven percent of businesses but is of particular concern in the wholesale sector at 17 percent. Cash flow, bad debts and profitability is of concern to twice as many businesses in the manufacturing, finance and insurance sectors at 15 percent compared to the average of seven percent."
At the state level the NSW Government remains one of the most popular at +18 points. It now shares top spot with the NT, although the survey was taken before the NT Government lost its majority.
Tasmania was the only other state government in positive territory (+7), while the SA Government was again the most unpopular, now sitting at -30 points.
"In NSW businesses continue to have a favourable view of the State Government with businesses pointing to its investment in infrastructure as a key positive. While in the NT businesses reported the government is supportive of small businesses, communicating well and providing work opportunities," said Mr Allan.
"South Australian businesses are critical of the State Government, saying taxation is too high, the economy has been poorly managed and business costs are increasing."
In terms of business confidence at a state or territory level the NT (+43) is now the most confident, displacing NSW (+31), while Queensland (+18) remains the least confident state. South Australia was the big mover up 26 points to +32, taking it from last place to now sit above the national average.
At an industry level hospitality has declined 27 points, moving from being the most confident sector last quarter (+46) to now sharing bottom spot with the transport and storage sector (+9). The cultural, recreational and personal services sector is now the most confident sector, up 17 points to +46.
"There was a dramatic shift in hospitality with major declines reported in sales and profitability. In good news the sector has a more positive outlook for this quarter with the sales and profitability indicators returning to positive territory," said Mr Allan.
"We also saw greater demand and increasing sales drive confidence up 25 points in the manufacturing sector and 26 points in building and construction. It seems the manufacturing sector is also benefiting from the fall in the Australian dollar."
At a local level metropolitan businesses are now twice as confident as regional SMEs (+40 versus +18) with the gap widening by 18 points this quarter. The most confident city is Darwin at +53, which compares to +36 in regional areas of the NT.
"It was interesting to see an eight point difference between regional and metro areas in their views towards the Federal Government’s policies, with regional SMBs more likely to think the Government is supportive," said Mr Allan.
The Sensis Business Index uses a net balance score which is the difference between the percentage of businesses with a positive outlook versus the percentage with a negative outlook.
Small and medium businesses comprise 99 percent of all businesses operating in Australia.