What is happening in the Canberra Market

B2B Editor25 November 2014

Frank Lo Pilato (managing partner), and Jonathon Colbran, (partner), from RSM Bird Cameron, Accountants and Business Advisors, Canberra, share their insights into the Canberra market and issues facing business today.

Established in 1922, RSM Bird Cameron in Canberra offers the full suite of specialist corporate and business advisory services. They support every stage of a business’ development, from incorporation to public listing, national and international expansion and mergers and acquisitions. Their corporate & personal insolvency advisors work to achieve the best possible outcome for troubled companies, their shareholders and other stakeholders, including financiers and creditors.

Running a business in Canberra can be a profitable and meaningful experience, but it is not without it’s ups and downs. Canberra is unique and often runs counter cyclical to the rest of the country. It also has an economy that has at it’s centre the federal public service, five universities and the building and construction industry.

But this doesn’t mean that there isn’t a strong and vibrant private sector in the ACT. There is, and it currently accounts for more nearly 60 per cent of all employment, through nearly 26,000 businesses.

“So bearing in mind the significance of the private sector to the ACT and regional economy it is important to have a handle on how it is travelling,” Frank said.

Both Frank and Jon are in an unique position to comment because, as turnaround and recovery professionals (see ‘insolvency practitioners’ in the old language), they are speaking with business advisors, auditors, lawyers and accountants most of their working days.

You may be surprised to hear what they have to say. Many would be forgiven for making the assumption that insolvency practitioners would be ‘making hay’ at the moment considering significant cuts to the public service and a downturn in the construction industry.

“There have been a number of high profile liquidations, particularly in the building and construction industry, but we are not seeing a significant increase in businesses seeking turnaround and recovery services,” Jon said.

According to RSM Bird Cameron businesses in the ACT seen to be weathering the storm and doing what they can to survive.

“Businesses are battening down the hatches and consolidating, in fact those seeking the services of insolvency services are down around 30 per cent,” Frank explained.

You would also be excused for assuming that this means that all is well for business in Canberra and that the economy is steaming ahead. According to RSM Cameron there are a number of factors at play that may have significant flow on implications for many viable Canberra businesses.

“We believe that a significant number of businesses are staving off insolvency because of uncharacteristically low interest rates, a softening of the Australian Tax Office to recover outstanding taxes and generally less risk taking,” Frank outlined.

What this means is that businesses are being given two years to pay back tax debts, they are not expanding, building or entering into leases at the same pace they were 18 months ago.

Other factors that are impacting on business in the ACT are changes in Federal Government spending through a new contractionary phase and funds allocation.

“This is a big issue for directors of not-for- profit organisations. These directors need to be aware of the risk that organisations may not continue to receive government funding and have a responsibility to ensure their viability,” Frank said.

Frank and Jon both agree that the hardest hit industries in the ACT, apart from the public service, have been construction, retail, and hospitality. Basically those industries that rely on discretionary spending.

There are of course positive reasons for seeking advice from turnaround and recovery professionals. These include understanding, how your business is travelling, and your responsibilities to ensure the viability of your activities.

“We have plenty of positive stories to tell of businesses that believed their only option was to liquidate, and after seeking advice from RSM Cameron have turned their business around and are now running healthy, profitable businesses,” Frank concluded.

For more information, contact:

Frank Lo Pilato, managing partner[email protected] &

Jonathon Colbran, partner [email protected]

RSM Bird Cameron
02 6217 0300 rsmi.com.au
With RSM Bird Cameron you really are… Connected for Success