More than 1000 WA businesses go bust, with more pain predicted

More than 1000 WA business went under last financial year, with a warning more could follow as high interest rates and cost-of-living pressures cause families to spend less. WA Liberal senator Dean Smith — a member of the Federal cost-of-living inquiry — analysed the latest figures produced by the Australian Securities Investment Commission, which showed 1079 WA businesses in 2023-24 entered insolvency. That’s nearly double the number of two years ago. “The cumulative impact of 13 interest rate rises over the past two years is now having a devastating impact on many businesses throughout WA as underlined by these shocking figures,” Senator Smith said. “During the June quarter alone, there were 308 companies entering insolvency — or one every seven hours. “They (businesses) are at the coal face of this cost-of-living crisis and unless the crisis ends soon, the number of business insolvencies in WA could explode over the coming year.” Senator Smith said construction, accommodation and food businesses were particularly being hit hard. Thousands of construction companies right across Australia have collapsed due to labour shortages, lack of supplies and skyrocketing costs. One of WA’s biggest and best-known residential companies, Collier Homes, has collapsed into liquidation after more than 60 years in business. Another Perth builder, Nicheliving, has failed to get its building contractor registration renewed, leaving more than 230 homes unfinished. “The ASIC figures show that during this quarter two sectors accounted for around one in three of all insolvencies in WA — construction (20 per cent), and accommodation and food 14 per cent,” Senator Smith said. The Reserve Bank of Australia this week decided to hold the cash rate at 4.35 per cent — bad news for home or business owners hoping for a rate cut after seeing their interest payments sky rocket since March last year when interest rates started to go up. A Chamber of Commerce and Industry WA survey earlier this year showed hard up West Australians were having to cut back on household staples as the cost-of-living crisis continues to bite. Senator Smith said businesses were being hit hard by the “triple whammy of rising costs due to inflation” while also having to service higher interest rate payments. At the same time, WA consumers were “becoming more fragile because of the cost-of-living crisis”, he said. “Small businesses account for 97 per cent of all businesses in WA with many families operating on small margins,” Senator Smith said. ‘“They are very sensitive to even a small cut back in consumer spending. “The impact of the cost-of-living crisis on consumers is underlined by the collapse in household savings with the latest official figures showing the ratio of household savings is now the lowest in 16 years at just 0.9 per cent.”