Here are some of our observations around some key trends of the last several years, and what it means for Australian businesses today.
Business Costs on the Rise Over the Last Decade
For most businesses, there are some key expenses that have seen significant and consistent increases over the past 5 years. To break these down:
Wages Growth
The chart below reflects the wages growth over the last 5 years which, for many businesses, are now 20% higher than the cost of wages pre-Covid. Much of this has occurred due to the lack of people available in the workforce, which might now be easing with unemployment starting to increase.
Currency Exchange Rates
The AUD relative to the EUR and USD is significantly worse than it was 5 years ago, adding roughly 15% to input costs for businesses purchasing stock, product or machinery from overseas.
Interest and Finance Costs
Whilst interest rates are falling, they remain approx. 1.5% higher than they were pre-Covid.
Electricity and Fuel Costs
For most businesses, annual increases in electricity prices have ranged between 10-20% during that time – meaning businesses are now paying 50% more or double what they were paying 5 years ago for electricity. Fuel prices increased by approx. 38% over that time.
So what’s the good news you might ask? There is one positive trend over the last 5 years – that is Automation.
Automation Isn’t Just for the Big End of Town Anymore
AI and automation has come a long way in recent years, and it’s now far more accessible, affordable, and user-friendly than ever.
You no longer need a team of engineers or consultants to get started. Tools like cobots (collaborative robots) are plug-and-play, don’t need cages, and can be reprogrammed in minutes. They’re designed to work alongside your team, not replace them. For smaller manufacturers, the ability to automate repetitive or physically demanding tasks without overhauling your whole operation is now an option.
Cobots and automation equipment are also more cost effective than ever. Especially when comparing the cost to the labour savings available and productivity gains. Utilising Equipment Finance, you can access a cobot with no upfront deposit and begin accessing these benefits immediately.
The following article from Australian Robotics talks more about the rise and use of automation: https://www.australiancobotics.org/articles/article/
Businesses can’t expect to stay the same and remain profitable in the future. The real difference between those that succeed and those that fall behind will be their willingness to pursue improvement, drive efficiencies, and embrace automation.
ATO Interest no longer tax deductible as of 1 July 2025
From 1 July 2025, interest incurred on ATO debt will no longer be tax deductible. This change applies to general interest charges and shortfall interest charges on overdue tax debt. Previously, these interest charges could be claimed as an expense, this is no longer the case.
Having ATO debt has serious flow on effects for businesses seeking finance. The major banks don’t look kindly to ATO debt and often turn away good businesses because of it. The ATO also has an aggressive approach to collecting the overdue amounts – from repayment plans that can hurt cashflow, to winding up businesses.
Speak to us before entering into arrangements with the ATO. There are a range of Working Capital Facilities that are available – facilities that only accrue interest when being utilised. Keeping the ATO up to date and having a Working Capital Facility available when needed can be an effective long-term strategy for your business.
Final Thoughts
The past 5 years have shown us that the cost of doing business will continue to evolve — sometimes in ways we can’t control. What we can control is how we prepare. By:
• Monitoring costs closely,
• Exploring automation and efficiency opportunities, and
• Putting flexible finance strategies in place,
…your business will then be in the best position to adapt, grow, and succeed.
As always, if you’d like to discuss how these trends affect your business, or explore finance solutions tailored to your needs, we’re here to help.
We are here to support your business.
Please speak to us about all things finance. Whether it be Equipment and Automotive Finance, Working Capital Finance which includes Debtor and Trade Finance, Property Finance including Construction Finance, Insurance Premium Funding. And yes, we also do Home Loan Finance.
We know that banks are becoming more selective and treating business customers worse than ever – please make us your first point of contact every time – we will get you a better outcome with a far better experience.
Please feel free to call us to chat about any of the above or get in touch via email:
Andrew Sutherland
0407 746 474
andrew.sutherland@halidonhill.com.au
