BUSINESS confidence in Tasmania is now steady at a record low levels, and there are expectations that the economy will weaken even further over the coming 12 months.

The latest Tasmanian Chamber of Chamber of Commerce and Industry (TCCI) Tasmanian Survey of Business Expectations shows business conditions and expectations for the Tasmanian economy has steadied at record lows.

The survey showed that Tasmanian businesses expect both the national and state economy to weaken over the next twelve months.

The confidence of Tasmanian businesses in the national economy over the next twelve months has increased slightly from 22.8 to 23.9 index points. Confidence in the Tasmanian economy has dropped slightly, with the index dropping from 27.3 to a new low of 26.5.

However, Tasmanian businesses continue to have more faith in the local economy than the national economy.

TCCI chief economist Richard Dowling said that the while business confidence remained at historical lows, it now appeared that it would not fall any lower.

“The survey shows that business conditions are still deteriorating but that expectations for further shocks have eased.

“Business confidence has fallen off a cliff, but it has hit the bottom. We are now in a position to set about taking action to restore confidence and grow the domestic economy,” Mr Dowling said.

“Business is clearly indicating the economy will get worse before it gets better. However, there are very early signs that Tasmanian business is thinking ahead to the recovery.

The availability of suitably qualified employees has remained as the number one constraint on Tasmanian business for five consecutive years.

The top five constraints in the March 2009 quarter were:
•    Availability of suitability qualified employees
•    Insufficient demand/economic activity
•    Non-wage labour costs (super, workers compensation)
•    Wage costs
•    Insurance

“Even through the current global recession, the availability of suitability qualified employees remains the biggest constraint on business growth,” Mr Dowling said.

“This indicates that business is still looking to grow and expand, but not having access to skilled labour is preventing it from doing so.”

Mr Dowling said over the past five years, skilled labour had been pulled out of the private sector and into the public sector through the offer of higher wages, a situation that had now proven to be unsustainable.

“Tasmania should not fear a reduction in the size of the public sector because our business sector is ready to make use of these skilled people,” Mr Dowling said.

Meanwhile the State Government said businesses continued to have more faith in the local economy than the national economy.

The Treasurer, Michael Aird, said the results of the latest TCCI survey were predictable in the current circumstances.

“It is not unexpected that business confidence has fallen given the uncertainty created by the global financial crisis,” Mr Aird said.

“However, the Tasmanian economy is weathering the storm relatively well as recent data on retail trade and building approvals shows.

“The Tasmanian Government is doing all it can to protect jobs and help businesses in these challenging times while also ensuring we are best positioned for the future.

“The Government has broadened the Tasmanian Industry Support Scheme which has already provided $3.5 million to business, is providing farm water development loans and is helping small businesses with specially tailored workshops.

Mr Aird said the announcement by the Australian Government that construction of its new broadband optic fibre network would commence in Tasmania was very exciting news.

“We are first cab off the rank and I expect the imminent start will be of significant benefit to the Tasmanian economy.

“While the global financial crisis is clearly affecting some sectors of our economy, the long term future is bright.”