Rate hike hits confidence, CPA urges productivity and red tape reform

CPA Australia says today’s interest rate rise will hit households and small businesses hard, compounding existing cost of living pressures and stretching already tight budgets.

Gavan Ord, Business and Investment Lead at CPA Australia said while the decision was not unexpected, inflation remains stubborn in parts of the economy, prompting further action by the Reserve Bank (RBA) when many borrowers believed the worst of the rate cycle was behind them.

“Borrowers who had been encouraged by recent rate cuts will be deeply disappointed, particularly households coming off long term fixed rates who are now facing much higher repayments.”

“Small businesses remain under pressure from high borrowing costs, rising inflation and low consumer confidence,” Mr Ord said. “For many, there are no easy options left.”

CPA Australia said support for small businesses should focus on long term reform rather than short term relief.

“What small businesses need most is decisive government action to reduce red tape and improve the overall business environment,” Mr Ord said. “Removing unnecessary regulatory burden helps businesses focus on growing, employing people and serving customers.”

As costs continue to climb, consumers may see flow on effects at the checkout.

“Many small businesses will have little choice but to pass some of these costs on to customers,” Mr Ord said. “Others will need to rethink investment and growth plans to manage cash flow and financial risk.”

“Businesses and individuals concerned about managing financial pressures should speak with a trusted adviser,” he said. “Accountants can help businesses plan, manage risk and navigate changing economic conditions.”

CPA Australia also called on governments to support access to professional advice.

“Incentivising small businesses to seek professional advice would strengthen resilience and improve long term outcomes during periods of economic uncertainty,” Mr Ord said.

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Simon Downes, External Affairs Lead
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