South Australian Confidence rose a marginal 3.4 points in the September quarter as businesses face unprecedented compliance demands.

According to the September quarter Survey of Business Expectations released today, compliance issues have surged in importance for businesses, ranking as the third-most pressing challenge after profitability and the cost of doing business.

The report reveals that 57.3% of businesses are spending more time on industrial relations compliance, largely due to the new ‘Closing the Loopholes’ law, which introduced complex definitions around casual employment, the ‘right to disconnect,’ and expanded rights for employee-like workers.

While this regulation aims to foster a healthier workplace environment, the resources required to implement these protocols can be particularly taxing for small businesses with limited staff.

Conversations with our clients consistently echo these findings – with many citing this administrative burden not only increases operational costs but also takes valuable time and focus away from core business activities, impacting overall productivity and growth.

Businesses simply cannot afford to increase operational cost any further, with 70.5% of respondents already citing high operational costs as a critical issue impacting their ability to maintain profitability and expand.

From rising material expenses to labour costs, businesses are finding it increasingly difficult to balance these with competitive pricing and growth initiatives.

The Cost of Materials Index, for example, sits at an elevated 146.7 points, indicating that a majority of businesses are still grappling with rising supply costs.

Additionally, overhead costs have remained steep at 151.6 points, further constraining cash flow for businesses of all sizes.

This reality means that even the smallest fluctuations in revenue can significantly affect financial viability, especially for some small and mid-sized enterprises in industries doing it particularly tough.

As costs continue to outpace revenue, I am seeing more and more South Australian Businesses explore strategies to alleviate this burden by looking at optimising their business processes with automation and Artificial Intelligence (AI). The challenge with AI is understanding its practical application to many businesses and identifying the actual problems to be solved or opportunities to be maximised.

The data shows 58.1% of businesses now use AI; a significant increase from when we asked in March, when just over a quarter of businesses said they were using AI.

With compliance challenges, labour shortages, and the increased cost of doing business, 69.4% of respondents now feel AI will be either very or potentially important in the future growth of their business.

These findings call for a strategic response, one that simplifies regulatory frameworks and supports businesses in finding affordable paths to productivity gains. All levels of Government should be mindful that the regulatory burden faced by businesses cannot continue to grow indefinitely without having consequences.

South Australia needs policies that address core productivity concerns, from easing regulatory complexity to incentivising capital investment and skill development.

Without this, the state’s businesses will remain caught in a cycle that curtails both profitability and growth, ultimately affecting South Australia’s economic future.

These results and more are explained in the Business Now report, highlighting findings in the September quarter South Australian Business Chamber, William Buck Survey of Business Expectations.