According to the latest data, the ACT had the highest rate of arrears over the past 12 months
According to the latest data from CreditorWatch, the ACT recorded a higher rate of arrears that any other territory or state over the past 12 months, with 13 per cent of businesses taking more than 60 days to pay their bills on average. While the Canberra economy is largely centred around government departments and agencies, statewide lockdowns in other parts of the country have impacted local business because they have prevented travel from neighbouring regions, said CreditorWatch CEO Patrick Coghlan.
“The ACT relies on surrounding regions to support it because it’s such a small territory,” he said. “The fact that the NSW regions have been locked down, as well as a lack of tourism in places like the snow fields, is certainly contributing to the cashflow issues that are happening down there.”
The fact that many politicians and their support staff have been unable to travel into Canberra to sit in parliament has also impacted local businesses, he said.
While this represented a big downturn for the ACT economy, Coghlan remained optimistic that the impact wouldn’t be long lasting.
Read more: Australia already in recession – CBA
“I think it’s similar to what Sydney businesses are facing,” he said. “It’s a big downturn, it’s not necessarily catastrophic, but it will become if it goes on too long. I’m quite positive that once restrictions start to get lifted there will be a significant bounce back like what we saw at the start of this calendar year.”
Unsurprisingly, Sydney rated the worst in terms of arrears out of all the capital cities, while 11 per cent of businesses in NSW were found to be in arrears. Western Australia and Tasmania fared the best from a state-wide perspective while Perth and Darwin led the pack out of all the capitals.
“What’s interesting is that Queensland and Victoria are quite similarly placed despite the fact Victoria has had almost 150-200 more days of lockdown over the last 18 months,” said Coghlan. “In particular, the Sunshine State is very much reliant on domestic tourism and there are certain parts of that state that are totally reliant on international tourism. When the borders are both shut internationally and domestically, it puts a huge amount of pressure on industries like accommodation, food and beverage but then also on those supplying and manufacturing to those particular industries.”
Read next: Cory Bannister – there is still untapped potential for brokers in the commercial finance market
While businesses across the country have been impacted by the latest round of lockdowns and border closures, Coghlan said he maintained an optimistic view in terms of insolvency figures over the coming months.
“We’re still seeing the banks and the ATO being extremely cautious and conservative and ultimately insolvency rates won’t start to creep up to anywhere near pre-COVID levels until they get back into a normal collection and wind up rhythm,” he said. “We don’t anticipate that happening until probably early to mid next year.”
