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Business births and deaths rate examined

Australia is lagging in the business creation stakes, according to new research.

The RSM research looked at data on business ‘births’ and ‘deaths’ over the last five years across 35 counties to rank Australia 23rd on the list, following countries including China, Singapore, and New Zealand.

Neil Cribb, director of RSM Bird Cameron in Australia, believes that while Australian business escaped relatively unscathed from the global financial crisis, the outlook is concerning.

“Cuts to interest rates and a decline in the value of the Australian dollar are helping some businesses. However, the costs of doing business in Australia, including high income tax rates, high labour costs and low productivity and compliance costs are still major issues,” Cribb said.

The research found that Australia has had a net gain of 58,000 businesses over the last five years, or an annual compound growth rate of 0.7 per cent. This figure puts Australia level with the UK.

However, the Department of Innovation believes that the Australian business landscape is in better shape than the findings indicate.

“Alternative measures of entrepreneurial activity and level of business creation indicate Australia is performing well compared to other countries,” a Department spokesperson said.

Business survival rates from June 2007-2011, laid out in the Department’s 2012 Australian Small Business key statistics and analysis report, found that medium sized businesses (20 to 199 employees) are performing best, with a 75.8 per cent survival rate.

Australian businesses have a survival rate of 60.4 per cent overall.

Jean Stephens, chief executive of RSM, believes governments can do more to encourage entrepreneurship and help businesses thrive.

The Australian Government has been pushing for business creation in regional Australia through its Innovative Regions Centre, run by the Enterprise Connect initiative.

“In regional areas of Australia undergoing long term structural adjustment, such as in northern Tasmania and northern Adelaide, IRC facilitators are working to identify and harness new opportunities for businesses under pressure from changing economic conditions,” the Department’s spokesperson said.

There are currently 11 Innovative Regions around Australia. Innovation Minister Senator Kim Carr announced the newest in North Queensland in July.

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Gina Baldassarre

Gina Baldassarre

Gina is a journalist at Dynamic Business. She enjoys learning to ice skate and collecting sappy inspirational quotes.

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