The report from the Small Business Commissioner has found that while the state’s small business sector was vibrant and contributed about $120 billion to the economy, it was struggling against the tide of inflation which had increased 16 per cent in four years in Queensland and 18 per cent in Brisbane.

The data indicates that while the state may have won the war against Covid, with $2.5 billion spent by the State Government on keeping business alive, it was struggling to survive the peace.

The report said that the household savings cushion that had been built up during Covid now appeared to have been spent as the cost of living escalated and interest rates increased markedly.

“The Household Savings Ratio has dipped to the lowest level in 10 years,” the report said.

“Historically, this is seen as the lowest levels of savings that consumers are prepared to go until they are not comfortable spending.

“Discretionary spend has stopped, consumers are cutting back where they can.

“In Queensland, consumption has started to slow down in 2023, but that has so far been offset by strong investment by the mining and construction industries and the purchasing of motor vehicles by small business. Government investment in infrastructure has also boosted the GDP contribution.”

During Covid, the savings ratio, which represents the percentage of household disposable income that has been saved, rose to almost 25 per cent and was now down to 10 per cent.

Consumer spending increased 28 per cent from 2019 but the report said small businesses needed to be aware that consumer spending at these levels “is not sustainable, and they need to prepare for spending to drop as consumers deal with the impacts of higher interest rates”.

The report found there was a brief but severe impact on the sector during Covid, but by March 2023 small business had recovered and profits were up 42 per cent on 2019 levels

The number of small businesses has grown almost 10 per cent since mid-2020, well above the national average and 18 of the 19 sectors had shown growth.

However, the survival rate of small business in Queensland was still only 64 per cent, the lowest in Australia, but an improvement on the 2019 level of 63.9 per cent.

The areas with the greatest growth in small business numbers were Jimboomba, Ormeau, Springfield-Redbank Plains, Sunshine Coast and Browns Plains.

Small Business Commissioner Dominque Lamb said the challenge now was to manage costs, profit margins and wage ratios.

“Despite these elevated levels of growth and migration, we know that the reduction in consumer spending, rising costs (especially due to increases in interest rates) and stagnant wages are playing heavily on the minds of Queensland small business owners,” Lamb said.

Employment and Small Business Minister Di Farmer said the Government provided more than $2.5 billion to support small business during Covid and this had allowed the sector to recover and return to profit and job creation.

“I know there are businesses swimming against the tide, dealing with the challenges thrown up by the cost-of-living pressures,” Farmer said.

“There is more to be done to help turn things around for these businesses and we will be relentless in this pursuit.”

Analysis of ABS data by Ray White found that Queensland had led the way in the number of new businesses created in the last financial year with growth of 2.3 per cent.

Healthcare and social assistance were the big growth areas.

This was reflected nationally with growth of 6.1 per cent, but there were areas where business numbers had fallen significantly, particularly retail and wholesale trade, administrative and support services and manufacturing.

“While it’s no surprise Queensland has led the charge, given its robust population growth over the last few years, the industries most active align with the changing demographic,” Ray White’s head of research Vanessa Rader said.