December 18, 2024 • 27 mins
Join us for an enlightening conversation with Andrew Sykes, a seasoned partner at RSM Australia, who brings over four decades of experience to our discussion on Canberra's small to medium-sized business landscape. Discover the intriguing dynamics of how different sectors are navigating economic challenges, with retail and hospitality facing struggles while others find ways to thrive. Andrew shares his wisdom on how businesses can protect their bottom line by identifying and plugging financial leaks. From shifts in consumer behavior to the ripple effects of changes in government employment, we've got a lot to unpack about the local economy's current state and future potential.
Looking ahead, we explore the landscape of growth opportunities that Canberra can seize. Andrew shares practical advice for capitalizing on property development and infrastructure projects like the light rail, as well as boosting tourism with key business infrastructure. We delve into Canberra's aspirations to become a global leader in defense and space technology, emphasizing the critical role of collaboration between higher education and industry. Plus, we touch on the cultural and economic significance of supporting local artists and sports initiatives. With insights into the city's upcoming economic report, this episode offers a comprehensive look at the opportunities and challenges shaping Canberra's economic future.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
Hello and welcome to the Canberra Business Podcast
brought to you by the CanberraBusiness Chamber with the
support of the University ofCanberra.
I'm Greg Harford from theBusiness Chamber and I'm
delighted to be kicking the newyear off with Andrew Sykes, a
partner at RSM Australia who'sbeen operating here in the
Canberra market for more than 40years.
Possibly not Andrew personally,but certainly the business
Andrew.
Welcome to the podcast.
A partner at RSM Australiawho's been operating here in the
Canberra market for more than40 years.
(00:29):
Possibly not Andrew personally,but certainly the business
Andrew.
Welcome to the podcast.
G'day, greg.
Happy to be here with you Now.
Rsm is a big assurance, tax andconsulting firm, but do you
want to tell us just a littlebit about what you do here in
Canberra?
Speaker 2 (00:40):
Yeah, what we do in Canberra is similar to what we
do across the country.
We're a multi-divisional firm.
We are quite often confusedwith being one of the big
players, but we're not.
We're a small business firmhere in Canberra and across the
country.
So we really serve small tomedium business.
Rsm started in 1922 in WesternAustralia when some accountants
(01:06):
about six accountants boughtsome Model T Fords and thought
they'd take accounting out intothe bush and since then we've
continued to maintain thatservice ethos serving small
business.
Speaker 1 (01:17):
And here you are now in the bush capital.
You've been operating here for40 years.
How big is your team here inCanberra?
Speaker 2 (01:23):
We're about 110 people here in Canberra.
We've had strong growth overthe last two to three years with
growth in the Canberra economy.
Speaker 1 (01:31):
So who are your clients?
You talked about those a littlebit before, but they're mainly
in that small to medium space.
Speaker 2 (01:37):
Yeah, canberra.
Well, based off some of yourown figures, greg, 97% of
Canberra business employs 20people or less, so the Canberra
business sector is not a bigbusiness, surprisingly thriving
though.
So we have a range of very longterm Canberra businesses that
some of them have been myclients.
(01:58):
I think one of my clients I'mon the third generation of
succession planning, so we havesome of the older Canberra
businesses and then we have someof the new ones, particularly
technology and property sectors,which have really grown in the
last few years in Canberra.
Speaker 1 (02:14):
Fantastic.
So you're seeing growth in yourclient base, which is fantastic
.
But with such a diverse pool ofbusinesses in there, you must
get some really good exposure towhat's really happening in the
Canberra business community.
Now all the news or much of thenews at the moment is a bit
grim.
Businesses are finding it a bittight.
Do you think that's a fairassessment?
Speaker 2 (02:35):
I think that is a fair assessment and there is a
lot of that.
People are being told it'stight around the country, so
they're behaving like it's tight.
Here in Canberra are being toldit's tight around the country,
so they're behaving like it'stight.
Here in Canberra we're seeing amix of reactions.
With a long-term establishedbusiness community, a lot of
Canberra business people arevery good business people and
they've done very well, sothey're pretty well resourced so
(02:58):
they're able to ride out theups and downs and, of course,
canberra's a fairly stableeconomy.
We are seeing some sectorsbeing hurt.
Retail is doing it tough andthat's a competition factor as
well as less money to spend, andI would say that the first
(03:19):
quarter of 2024, so Januarythrough March was probably the
toughest sector we've ever seenin the hospitality industry.
So there's a lot of hospitalityplayers doing it very hard
there in Canberra.
Speaker 1 (03:32):
Yeah, but at the same time you go out and about and
you see some of those new andquite fashionable restaurants
being full of people, is theresomething that's making some of
those firms different to others?
Do you think?
Speaker 2 (03:45):
Yeah, well, newness and variety is one thing, but
I'm with you.
Try and book a restaurant inCanberra.
Try and get somewhere to eat.
If you don't have a booking onFriday or Saturday night, right,
it is busy.
But what we're seeing is thatwhen, for example, a couple may
have gone out three nights aweek, they'll now be going out
(04:08):
two nights a week.
We'll be seeing that if both ofthose nights previously were
some of you know very high-endrestaurants, they'll be doing
one high-end and they'll go to aclub for another or previously.
You know, if you went to theclub you may be getting takeaway
.
We're also seeing that thespend.
(04:29):
So when they go out, peoplejust won't spend as much.
They'll still go out, but youknow they'll buy a $70 bottle of
Riesling instead of a $200.
You know good for the localRiesling producers, because we
do produce some of the bestRieslings in the world.
But instead of spending $200 ona bottle of wine, they'll spend
$80, you know yeah absolutelyso across the board.
Speaker 1 (04:53):
obviously you've got pressure on consumer spending,
but what are the otherchallenges, do you think, that
are facing businesses here inthe capital?
Speaker 2 (05:05):
Well, canberra has always been a very strong
government town and we have seenthat certain pressure
throughout.
You know, we've had the SenateEstimate Committee hearings,
we've had pressure on theconsulting sector and a lot of
the employees or a lot of thepeople impacted have been at the
higher end of the paydemographic.
So we are seeing that not onlyis there interest rate pressure
(05:29):
but we're seeing that a lot ofhighly paid Canberrans have
actually had their positions cutor they've been transitioned
into APS outside of theprofessional consulting
practices and that's justimpacting on the money that's
flowing around town practicesand that's just impacting on the
money that's flowing aroundtown.
Speaker 1 (05:47):
And obviously we often hear about the challenges
of finding people to work herein Canberra, finding good,
skilled, qualified people tofill a range of jobs, everything
from baristas to even retailand into that high-end
consulting.
Do you think the changes in theemployment market at the moment
are impacting that?
Is it a bit easier to findpeople?
Uh, it's easy hard to say.
Speaker 2 (06:08):
Canberra my experience of canberra, business
and and we we would have seenthat anybody who's tried to
build in canberra you think,okay, well, construction's down,
so there'll be excess, uh,trades and labor available so
I'll get a cheaper price.
That's not the case because wehave a very transient workforce
here.
So if things are quiet inCanberra, historically people
(06:29):
have tended to leave and they'llgo back to to Sydney or
Melbourne or Brisbane.
We are now seeing moremigration come through into that
and supporting that, thatsector.
I think I read the other daythat our Indian population now
is up to 3.8% of the community.
So we are seeing a lot of veryhighly skilled workers coming
(06:51):
through, migration that isfilling the gap and those
workers aren't transient, sothey'll stay here, they'll do a
contract.
That contract will finish,they'll stay and do the next one
.
So I actually think that overmy working career I think it's
become easier to get people andeven particularly in the last 12
to 18 months, we've seen theemployment market free up a bit.
Speaker 1 (07:16):
Okay, so, while things are tough, what advice do
you have for businesses whomight be feeling really
pressured at the moment?
Speaker 2 (07:24):
have for businesses who might be feeling really
pressured at the moment.
Yeah, that's an interesting one.
I think it's always easy tofocus on top line revenue and
growth.
Everybody likes to sell more,for example, in December 2024
than we did in December 2023.
Much harder to control your topline.
It's a lot easier to controlthe bottom line.
(07:46):
One of my favourite stats, inparticular when I'm talking to
individuals about their tax andtheir financial affairs, is to
say focus on the smaller things,the little leakages.
The example I use is 27,.
If you could save $27 every dayof the year, that will get you
$10,000 over the course of ayear.
(08:06):
Over five years, that's 50.
Over 10 years, that's 100,000.
So, if times are tough, focuson where are you actually
leaking.
Are there unnecessarysubscriptions you're paying?
Are you maximising efficiencyin your workforce?
Is there any area you can cutcosts just that little bit?
(08:29):
It doesn't have to be, uh, bigchanges.
It can be little changes and,in particular, cumulative little
changes.
Uh, if you can go into abusiness and and save two
hundred dollars a day, that'syou know.
It's over $1,000 a week, over$50,000 in a year.
Speaker 1 (08:48):
So then that really adds up.
So I guess your advice reallyis to tighten your belts just a
notch, without necessarilygetting the knife out.
Speaker 2 (08:55):
Yeah, that's right, and well, it is very true that
you have to bait a hook to catcha fish, so you do have to,
quite often in business, spendmoney to make money, but are you
wasting that money?
In particular, have a look atyour taxes.
Have a look at some of yourindirect taxes, your payroll tax
(09:17):
.
Have a look at are youstructured properly?
Are you as efficient as you canbe in all of your taxes, those
leakages from business thatdon't really add anything to
your bottom line.
Speaker 1 (09:31):
Now Canberra's business sector is much bigger
than many people realise.
Often people outside look at usand say, oh, it's the public
service and government capitalof Australia, but actually two
thirds of workers are employedin the private sector here.
So where do you see the biggestgrowth opportunities for
business?
Here in the capital.
Speaker 2 (09:50):
You make a really good point and with one-third of
Canberra's workforce workingfor the government, we quite
often assume that Canberra'sjust a government town and
people are surprised when theyfind out.
At RSM I'm in the businessadvisory division.
We have approximately 40accountants and that's all
business.
That's no government work atall.
(10:11):
Opportunities, though with sucha strong employer and spender
in town, we do see increasingopportunities supporting and
supplying to government.
We are seeing, even thoughthere has been pressure on that
consulting sector, we're seeingthat coming back very strongly,
just in the right areas.
(10:31):
Property is obviously boominghere in town and anybody who
lives in Woden you can see thenumber of units that are being
released there.
So anything related to theproperty sector and we are
seeing Canberra has been on agrowth wave for the last four or
(10:52):
five years.
I mean growth has really kickedoff here since the pandemic.
We're seeing increasedinfrastructure spend.
So whether you love or hatethings like the light rail, they
drive our economy.
Speaker 1 (11:08):
So let's talk about light rail, seeing as you raise
it, is it good or bad for thecity?
Obviously, it's going to drivea lot of investment, as it
happens.
But beyond that, is thereongoing economic return, do you
think?
Speaker 2 (11:23):
There's certainly ongoing economic return while
it's being built.
Once it's finished, I think.
Yeah, it's a very loadedquestion and yeah, there's been
a couple of elections foughtover it so far and the Canberra
community has indicated thatthey want a light rail.
We are seeing that thatinfrastructure spend.
If you go and stay, try andbook a room at some of our lower
(11:47):
cost motels I mean a room atsome of our our lower cost
motels, I mean revenue peravailable night in across
canberra is up.
We're seeing workers here.
They're staying here long term.
There's a lot of money flowingaround the community from it and
we are also seeing thedevelopment of the land along
that corridor.
Whether it itself will make anymoney, I I I don't think
(12:07):
there's any public transportanywhere that really makes any
money, does it?
Speaker 1 (12:13):
Well, no, I think that's right.
Certainly not in Australia orthis part of the world.
Certainly, public transportoften loses money and I think
all over the world, most publictransport will be losing money.
But what about otherinfrastructure, Andrew?
What do you think we're missinghere in the city?
Do we need to get theconvention centre done?
Are there other things thatwill really help drive the
(12:33):
economy forward?
Speaker 2 (12:35):
Well, that is once again.
That's a really good questionbecause if we have a look at and
I referenced before thatone-third or just over one-third
of the Canberra workingpopulation is government.
If you went back 20 or 30 yearsago, that was in excess of 50%.
If you went back to the 70s, itwas two-thirds or more.
(12:57):
We need business infrastructureas we continue to grow.
You mentioned the conventioncentre 100%.
We need something that's goingto attract and bring people to
town.
I think Melbourne does thatabsolutely terrifically.
Melbourne is an event city.
Canberra has some alreadyexisting great infrastructure.
(13:18):
But yeah, the obvious one isand I'll declare it, I'm a rugby
fan, would love to see a squarefield down by the lake.
So some of that spending isgoing to increase tourism.
We have marquee events likeFloriade, we have the National
Gallery.
We already have some greatstuff here.
But if we could build theshoulders of the tourism spend,
(13:42):
that's going to flow through tomore local business.
I also think we need morespending on technology and
technology-based hubs and growthin our innovation sector,
driven with assistance fromgovernment.
We've got a great knowledgeworker base here in Canberra
that we could really continue togrow and facilitate and develop
(14:05):
.
But out of all of that I wouldsay Convention Centre's probably
the most needed large-scaleinfrastructure project in the
town.
Speaker 1 (14:13):
And certainly the numbers in terms of visitor
spend associated withconferences are very substantial
and would be a real boon forretail, hospo and other areas of
the economy right.
Speaker 2 (14:22):
Yeah, that's right, so it flows through and with our
existing.
The great thing about aconvention centre, or even the
oval by the lake, a stadium bythe lake, is it's only one part
of the spend.
So you come to Canberra, you goto a convention.
We have other great assets.
(14:43):
We have National Gallery, wehave the High Court, we have all
these other marquee places.
So it extends it into, insteadof just an overnight, a three,
four-day spend.
Which is always a challengehere is to get people not only
to come but to stay longer.
Speaker 1 (15:01):
You talk about the need for infrastructure and I
think the Chamber certainlyagrees with you.
We need to see a lot moreinvestment in infrastructure.
But how affordable is that?
The Territory's got limitedbudgets.
The Commonwealth seems notwilling to come to the party in
the way that it might have donein the years before
self-government.
How do we prioritise and how dowe bridge the gap between
(15:26):
what's affordable and what'sdesirable?
Speaker 2 (15:29):
Well, we do suffer from not?
I don't think if you read whatthe government says in the
budget, we don't get our fairshare of GST, but I think every
government says that.
And the funding?
I think it's down to prioritiesand I think it's down to being
able to take a long-term visionof what the city looks like.
(15:51):
Certainly, in my view, the, thegovernments tend to focus on
very short term and funding inthe short term, but you, you
really are looking atmulti-generational type spends
and and not, you know,generational in terms of working
careers, not not lifespan.
So if we spread the cost andthe spend over a long enough
(16:16):
time, that gives the governmentthe ability to fund it.
But it's also involvingbusiness in there and bringing
in big business partners alongfor the ride.
Speaker 1 (16:28):
Sorry.
Speaker 2 (16:28):
public-private partnership Public-private yep,
yep, and I don't know if that'sreally explored very well in
this town.
Speaker 1 (16:36):
So opportunities to innovate and do more, perhaps.
Now I just want to come back tothe subject of innovation,
which we touched on a little bitearlier.
And obviously you know,canberra's future, I think,
hinges on its ability toinnovate and lead in key
industries.
But where do you see the focusof that innovation happening?
Speaker 2 (16:57):
Generally, as I said before, we've got a large
knowledge worker base.
Our very good public serviceemployers have spent years and
years training up and we alsohave quite a significant
university sector here, so wehave the ability to produce
those knowledge workers.
Obviously, that technologysector really jumps out.
(17:22):
We have some existing good.
You know Sebrin does a good jobat harnessing innovation but
some more funding in that areatechnology, ai and that sort of
growing sector.
Speaker 1 (17:40):
So, on the subject of higher education institutions,
obviously there's a lot ofpressure on our universities at
the moment.
How do you think the city orthe territory, and indeed
business, can foster better,greater collaboration between
those institutions and industry?
Speaker 2 (17:56):
I think overall we seem to do a pretty good job of
that anyway.
I think the ANU has certainlydeveloped as one great example,
as has the University ofCanberra, with the city fringe
type infrastructure built aroundit.
A lot of that comes down toplanning.
Some of our repurposing anyland here in Canberra is a
(18:19):
pretty difficult experience.
With our planning laws thechange of use charges can be
very prohibitive.
Your 75% betterment tax on yourlease purpose clause changes
can really be prohibitive.
So some of that streamlining,as for example and we have
(18:44):
emerging universities coming inhere as they grow the ability to
repurpose and rezone the landaround them without so much
significant cost.
Speaker 1 (18:57):
Canberra businesses have quite a strong heritage in
terms of defence and spacetechnology, which often is not
something that's particularlywell known, but how do you think
Canberra can position itself asa global leader in those
sectors?
Speaker 2 (19:10):
Yeah, that's a good one.
We do have a business RSM inCanberra is actually working
with a company that's looking todevelop a rocket launching
facility, but that's in NorthernAustralia.
So really our role shouldprobably be on that, the pivot
point between government andthose far-flung organisations.
(19:33):
We're too far away from theequator to launch anything, but
we could support themanufacturing sector, the
liaison with government, and bethat, as I said, that pivot
between international andprivate organisations and the
government.
Speaker 1 (19:49):
It's a bit of a shame really, isn't it?
It would be quite majestic tosee some rockets lifting off
from down the bottom of LakeBurley Griffin there.
Speaker 2 (19:55):
Yeah, it'd be nice, wouldn't it?
But unfortunately I think thecost of it I don't think it's
been looked at, but the cost ofit you've got to be.
There's only there's actuallyvery few points in the world you
can launch a rocket from and doit commercially well.
But that's just an example ofone of those growth industries
that Canberra has.
If you're a smart, if you're aninnovative technology-based
(20:17):
company and you're looking for asmart workforce, canberra has a
smart workforce.
So you know how can thegovernment try and attract and
offer incentives for thoseorganisations.
You know how could we attract alarge international technology
company to come in, for example,and set up and hire our local
workers?
Speaker 1 (20:38):
And that's a really good point, and one of the
things that the business chamberhas often talked about is the
need to be trying to attractmore businesses here.
What do you think are thethings that will help bring
business to Canberra?
Speaker 2 (20:55):
I think you need the basics.
You need access to housing, youneed a good healthcare system
and you need a good educationsystem.
The government has to continueto invest and spend on those
things to make it worthwhile.
As a larger employer, you wantto look at your ability to be
able to house your existingstaff that you're going to bring
(21:17):
into town and for their kids togo to school and receive health
care and education, et cetera.
But you're also going to askyourself well, who am I going to
employ for my future and whereare they going to come from?
Speaker 1 (21:31):
Now, we've talked a lot about physical
infrastructure, we've talkedabout some workforce issues, but
what about cultural initiatives?
Do you think that they enhancethe city's livability and appeal
?
Speaker 2 (21:44):
Yes, I think they do.
I think you know I mentionedbefore you know 3.8% of our
population is now Indian.
I think the increasingdiversity and access to that
provides not only entertainmentbut just better understanding of
people getting on.
Speaker 1 (22:04):
Yeah, and in terms of the arts, do you think they
play an important role inattracting and keeping people
here in the city as well?
Is there a good benefit-costanalysis for that?
Speaker 2 (22:12):
Well, yeah, you do know I'm an accountant, don't
you?
Speaker 1 (22:16):
Absolutely.
Speaker 2 (22:17):
Look, I'm sure these are topical conversations around
your summer barbecues.
Yeah, that's right.
So not a strong view on thearts.
But look, an arts and culturalsector is important.
I certainly know my wife is farmore interested in the arts
than I am, but, that having beensaid, we make regular trips up
to the Sydney Opera House, sothose cultural institutions do
(22:41):
bring people to Canberra and dohelp business.
It might not look like it.
General spend on artwork aroundis a very heated debate.
There's some of the artwork inCanberra that really does divide
people and whether thegovernment should be spending on
it.
I would certainly think, ifwe're going to spend, maybe we
(23:01):
should spend on the local artistrather than international.
Speaker 1 (23:05):
And there'll certainly be some people who
might be listening to this andwho might say well, rugby and
the need for a new stadium, orindeed sports generally, is just
the other side of that culturallens.
So some people reallyappreciate opera and will travel
to that.
Some really appreciate rugbyand will come for that too.
Speaker 2 (23:22):
Yeah, but I think the money tends to flow with the
sport, at least in the shortterm.
I've said to be quite clear,I'm a big supporter of rugby and
a stadium near the city.
I think it brings an enormousamount to Canberra.
Speaker 1 (23:41):
Now I understand you're producing, or will be
producing this year, a report onCanberra's economic future.
When's that coming out and whatcan we expect to see?
Speaker 2 (23:50):
That'll come out in the first quarter of next year
and RSM nationally has done ourleading cities reports and the
next city that we're going tolook at is Canberra.
Rsm.
We have our own full-timeeconomist, Devika, and she's
going to be looking at theeconomics and we're going to
answer some of those questions,or look at some of those
(24:11):
questions that we've touched onbriefly.
What is the role ofinfrastructure spend?
What do we need to spend on?
What is the place of Canberrawithin the Australian broader
business community?
Speaker 1 (24:25):
Excellent.
Well, we'll look forward toseeing that report when it comes
available sometime in the nexttwo or three months, I guess.
Andrew, just to sort of finishoff this chat, today you know
it's still summer, we're all outand about at the Barbies and
what have you?
What are you hoping to see thisyear for Canberra?
Speaker 2 (24:46):
This year for Canberra.
I would like to see there is alot of talk about interest rates
dropping again, economiesstarting to get more vibrant.
I think Canberra's built afantastic base.
I've been in Canberra since1981.
I've been an accountant heresince the early 90s and the
(25:08):
maturity and growth andcontinued growth.
So I'd like to see a renewal inconfidence.
You mentioned new restaurantsand yeah, we are seeing that new
venues continue to open up,that new infrastructure is being
built.
Our developers you know landsales have probably dropped off
(25:30):
a bit in this region.
Hopefully see land salespicking up and just a general
sense of confidence coming backinto Canberra again.
Speaker 1 (25:40):
Yeah, it would be really good to see a bit more
confidence coming back into themarket, and I guess one of the
challenges there, of course, isthe federal election.
Are you expecting to see a bitof a slowdown here in the local
economy as a result of theelection campaign in the
caretaker period?
Speaker 2 (25:53):
Yeah, we always suffer a bit in the caretaker
period.
Federal spending is soimportant, particularly in the
professional services sector,which has been problematic over
the last 12 to 18 months, aswe've seen.
Hopefully that starts toresolve itself and the
(26:13):
government as a customer comesto a better understanding of
what value proposition that theyare after and we can get a
little more certainty.
So, yeah, a bit of certaintywill drive that confidence.
Speaker 1 (26:26):
Excellent.
Well, we'll keep our fingerscrossed for certainty,
confidence and, indeed, a bit ofa bounce back as the year goes
on.
Andrew Sykes, thank you so muchfor joining us here on the
Canberra Business Podcast today.
It's been great having a chatto you.
You're welcome, thanks, greg.
So, thank you, andrew.
I'm Greg Harford from theCanberra Business Chamber and
I've been talking today toAndrew Sykes, the managing
partner of RSM Canberra.
This has been the Canberra forits support.
(26:48):
Don't forget that your businesscan benefit from fresh ideas
and perspectives by usingstudent interns, and if you want
to know more, just reach out tocareers at canberraeduau.
This is the Canberra BusinessPodcast.
Catch you next time.
Hello and welcome to the Canberra Business Podcast
brought to you by the CanberraBusiness Chamber with the
support of the University ofCanberra.
I'm Greg Harford from theBusiness Chamber and I'm
delighted to be kicking the newyear off with Andrew Sykes, a
partner at RSM Australia who'sbeen operating here in the
Canberra market for more than 40years.
Possibly not Andrew personally,but certainly the business
Andrew.
Welcome to the podcast.
A partner at RSM Australiawho's been operating here in the
Canberra market for more than40 years.
(00:29):
Possibly not Andrew personally,but certainly the business
Andrew.
Welcome to the podcast.
G'day, greg.
Happy to be here with you Now.
Rsm is a big assurance, tax andconsulting firm, but do you
want to tell us just a littlebit about what you do here in
Canberra?
Speaker 2 (00:40):
Yeah, what we do in Canberra is similar to what we
do across the country.
We're a multi-divisional firm.
We are quite often confusedwith being one of the big
players, but we're not.
We're a small business firmhere in Canberra and across the
country.
So we really serve small tomedium business.
Rsm started in 1922 in WesternAustralia when some accountants
(01:06):
about six accountants boughtsome Model T Fords and thought
they'd take accounting out intothe bush and since then we've
continued to maintain thatservice ethos serving small
business.
Speaker 1 (01:17):
And here you are now in the bush capital.
You've been operating here for40 years.
How big is your team here inCanberra?
Speaker 2 (01:23):
We're about 110 people here in Canberra.
We've had strong growth overthe last two to three years with
growth in the Canberra economy.
Speaker 1 (01:31):
So who are your clients?
You talked about those a littlebit before, but they're mainly
in that small to medium space.
Speaker 2 (01:37):
Yeah, canberra.
Well, based off some of yourown figures, greg, 97% of
Canberra business employs 20people or less, so the Canberra
business sector is not a bigbusiness, surprisingly thriving
though.
So we have a range of very longterm Canberra businesses that
some of them have been myclients.
(01:58):
I think one of my clients I'mon the third generation of
succession planning, so we havesome of the older Canberra
businesses and then we have someof the new ones, particularly
technology and property sectors,which have really grown in the
last few years in Canberra.
Speaker 1 (02:14):
Fantastic.
So you're seeing growth in yourclient base, which is fantastic
.
But with such a diverse pool ofbusinesses in there, you must
get some really good exposure towhat's really happening in the
Canberra business community.
Now all the news or much of thenews at the moment is a bit
grim.
Businesses are finding it a bittight.
Do you think that's a fairassessment?
Speaker 2 (02:35):
I think that is a fair assessment and there is a
lot of that.
People are being told it'stight around the country, so
they're behaving like it's tight.
Here in Canberra are being toldit's tight around the country,
so they're behaving like it'stight.
Here in Canberra we're seeing amix of reactions.
With a long-term establishedbusiness community, a lot of
Canberra business people arevery good business people and
they've done very well, sothey're pretty well resourced so
(02:58):
they're able to ride out theups and downs and, of course,
canberra's a fairly stableeconomy.
We are seeing some sectorsbeing hurt.
Retail is doing it tough andthat's a competition factor as
well as less money to spend, andI would say that the first
(03:19):
quarter of 2024, so Januarythrough March was probably the
toughest sector we've ever seenin the hospitality industry.
So there's a lot of hospitalityplayers doing it very hard
there in Canberra.
Speaker 1 (03:32):
Yeah, but at the same time you go out and about and
you see some of those new andquite fashionable restaurants
being full of people, is theresomething that's making some of
those firms different to others?
Do you think?
Speaker 2 (03:45):
Yeah, well, newness and variety is one thing, but
I'm with you.
Try and book a restaurant inCanberra.
Try and get somewhere to eat.
If you don't have a booking onFriday or Saturday night, right,
it is busy.
But what we're seeing is thatwhen, for example, a couple may
have gone out three nights aweek, they'll now be going out
(04:08):
two nights a week.
We'll be seeing that if both ofthose nights previously were
some of you know very high-endrestaurants, they'll be doing
one high-end and they'll go to aclub for another or previously.
You know, if you went to theclub you may be getting takeaway
.
We're also seeing that thespend.
(04:29):
So when they go out, peoplejust won't spend as much.
They'll still go out, but youknow they'll buy a $70 bottle of
Riesling instead of a $200.
You know good for the localRiesling producers, because we
do produce some of the bestRieslings in the world.
But instead of spending $200 ona bottle of wine, they'll spend
$80, you know yeah absolutelyso across the board.
Speaker 1 (04:53):
obviously you've got pressure on consumer spending,
but what are the otherchallenges, do you think, that
are facing businesses here inthe capital?
Speaker 2 (05:05):
Well, canberra has always been a very strong
government town and we have seenthat certain pressure
throughout.
You know, we've had the SenateEstimate Committee hearings,
we've had pressure on theconsulting sector and a lot of
the employees or a lot of thepeople impacted have been at the
higher end of the paydemographic.
So we are seeing that not onlyis there interest rate pressure
(05:29):
but we're seeing that a lot ofhighly paid Canberrans have
actually had their positions cutor they've been transitioned
into APS outside of theprofessional consulting
practices and that's justimpacting on the money that's
flowing around town practicesand that's just impacting on the
money that's flowing aroundtown.
Speaker 1 (05:47):
And obviously we often hear about the challenges
of finding people to work herein Canberra, finding good,
skilled, qualified people tofill a range of jobs, everything
from baristas to even retailand into that high-end
consulting.
Do you think the changes in theemployment market at the moment
are impacting that?
Is it a bit easier to findpeople?
Uh, it's easy hard to say.
Speaker 2 (06:08):
Canberra my experience of canberra, business
and and we we would have seenthat anybody who's tried to
build in canberra you think,okay, well, construction's down,
so there'll be excess, uh,trades and labor available so
I'll get a cheaper price.
That's not the case because wehave a very transient workforce
here.
So if things are quiet inCanberra, historically people
(06:29):
have tended to leave and they'llgo back to to Sydney or
Melbourne or Brisbane.
We are now seeing moremigration come through into that
and supporting that, thatsector.
I think I read the other daythat our Indian population now
is up to 3.8% of the community.
So we are seeing a lot of veryhighly skilled workers coming
(06:51):
through, migration that isfilling the gap and those
workers aren't transient, sothey'll stay here, they'll do a
contract.
That contract will finish,they'll stay and do the next one
.
So I actually think that overmy working career I think it's
become easier to get people andeven particularly in the last 12
to 18 months, we've seen theemployment market free up a bit.
Speaker 1 (07:16):
Okay, so, while things are tough, what advice do
you have for businesses whomight be feeling really
pressured at the moment?
Speaker 2 (07:24):
have for businesses who might be feeling really
pressured at the moment.
Yeah, that's an interesting one.
I think it's always easy tofocus on top line revenue and
growth.
Everybody likes to sell more,for example, in December 2024
than we did in December 2023.
Much harder to control your topline.
It's a lot easier to controlthe bottom line.
(07:46):
One of my favourite stats, inparticular when I'm talking to
individuals about their tax andtheir financial affairs, is to
say focus on the smaller things,the little leakages.
The example I use is 27,.
If you could save $27 every dayof the year, that will get you
$10,000 over the course of ayear.
(08:06):
Over five years, that's 50.
Over 10 years, that's 100,000.
So, if times are tough, focuson where are you actually
leaking.
Are there unnecessarysubscriptions you're paying?
Are you maximising efficiencyin your workforce?
Is there any area you can cutcosts just that little bit?
(08:29):
It doesn't have to be, uh, bigchanges.
It can be little changes and,in particular, cumulative little
changes.
Uh, if you can go into abusiness and and save two
hundred dollars a day, that'syou know.
It's over $1,000 a week, over$50,000 in a year.
Speaker 1 (08:48):
So then that really adds up.
So I guess your advice reallyis to tighten your belts just a
notch, without necessarilygetting the knife out.
Speaker 2 (08:55):
Yeah, that's right, and well, it is very true that
you have to bait a hook to catcha fish, so you do have to,
quite often in business, spendmoney to make money, but are you
wasting that money?
In particular, have a look atyour taxes.
Have a look at some of yourindirect taxes, your payroll tax
(09:17):
.
Have a look at are youstructured properly?
Are you as efficient as you canbe in all of your taxes, those
leakages from business thatdon't really add anything to
your bottom line.
Speaker 1 (09:31):
Now Canberra's business sector is much bigger
than many people realise.
Often people outside look at usand say, oh, it's the public
service and government capitalof Australia, but actually two
thirds of workers are employedin the private sector here.
So where do you see the biggestgrowth opportunities for
business?
Here in the capital.
Speaker 2 (09:50):
You make a really good point and with one-third of
Canberra's workforce workingfor the government, we quite
often assume that Canberra'sjust a government town and
people are surprised when theyfind out.
At RSM I'm in the businessadvisory division.
We have approximately 40accountants and that's all
business.
That's no government work atall.
(10:11):
Opportunities, though with sucha strong employer and spender
in town, we do see increasingopportunities supporting and
supplying to government.
We are seeing, even thoughthere has been pressure on that
consulting sector, we're seeingthat coming back very strongly,
just in the right areas.
(10:31):
Property is obviously boominghere in town and anybody who
lives in Woden you can see thenumber of units that are being
released there.
So anything related to theproperty sector and we are
seeing Canberra has been on agrowth wave for the last four or
(10:52):
five years.
I mean growth has really kickedoff here since the pandemic.
We're seeing increasedinfrastructure spend.
So whether you love or hatethings like the light rail, they
drive our economy.
Speaker 1 (11:08):
So let's talk about light rail, seeing as you raise
it, is it good or bad for thecity?
Obviously, it's going to drivea lot of investment, as it
happens.
But beyond that, is thereongoing economic return, do you
think?
Speaker 2 (11:23):
There's certainly ongoing economic return while
it's being built.
Once it's finished, I think.
Yeah, it's a very loadedquestion and yeah, there's been
a couple of elections foughtover it so far and the Canberra
community has indicated thatthey want a light rail.
We are seeing that thatinfrastructure spend.
If you go and stay, try andbook a room at some of our lower
(11:47):
cost motels I mean a room atsome of our our lower cost
motels, I mean revenue peravailable night in across
canberra is up.
We're seeing workers here.
They're staying here long term.
There's a lot of money flowingaround the community from it and
we are also seeing thedevelopment of the land along
that corridor.
Whether it itself will make anymoney, I I I don't think
(12:07):
there's any public transportanywhere that really makes any
money, does it?
Speaker 1 (12:13):
Well, no, I think that's right.
Certainly not in Australia orthis part of the world.
Certainly, public transportoften loses money and I think
all over the world, most publictransport will be losing money.
But what about otherinfrastructure, Andrew?
What do you think we're missinghere in the city?
Do we need to get theconvention centre done?
Are there other things thatwill really help drive the
(12:33):
economy forward?
Speaker 2 (12:35):
Well, that is once again.
That's a really good questionbecause if we have a look at and
I referenced before thatone-third or just over one-third
of the Canberra workingpopulation is government.
If you went back 20 or 30 yearsago, that was in excess of 50%.
If you went back to the 70s, itwas two-thirds or more.
(12:57):
We need business infrastructureas we continue to grow.
You mentioned the conventioncentre 100%.
We need something that's goingto attract and bring people to
town.
I think Melbourne does thatabsolutely terrifically.
Melbourne is an event city.
Canberra has some alreadyexisting great infrastructure.
(13:18):
But yeah, the obvious one isand I'll declare it, I'm a rugby
fan, would love to see a squarefield down by the lake.
So some of that spending isgoing to increase tourism.
We have marquee events likeFloriade, we have the National
Gallery.
We already have some greatstuff here.
But if we could build theshoulders of the tourism spend,
(13:42):
that's going to flow through tomore local business.
I also think we need morespending on technology and
technology-based hubs and growthin our innovation sector,
driven with assistance fromgovernment.
We've got a great knowledgeworker base here in Canberra
that we could really continue togrow and facilitate and develop
(14:05):
.
But out of all of that I wouldsay Convention Centre's probably
the most needed large-scaleinfrastructure project in the
town.
Speaker 1 (14:13):
And certainly the numbers in terms of visitor
spend associated withconferences are very substantial
and would be a real boon forretail, hospo and other areas of
the economy right.
Speaker 2 (14:22):
Yeah, that's right, so it flows through and with our
existing.
The great thing about aconvention centre, or even the
oval by the lake, a stadium bythe lake, is it's only one part
of the spend.
So you come to Canberra, you goto a convention.
We have other great assets.
(14:43):
We have National Gallery, wehave the High Court, we have all
these other marquee places.
So it extends it into, insteadof just an overnight, a three,
four-day spend.
Which is always a challengehere is to get people not only
to come but to stay longer.
Speaker 1 (15:01):
You talk about the need for infrastructure and I
think the Chamber certainlyagrees with you.
We need to see a lot moreinvestment in infrastructure.
But how affordable is that?
The Territory's got limitedbudgets.
The Commonwealth seems notwilling to come to the party in
the way that it might have donein the years before
self-government.
How do we prioritise and how dowe bridge the gap between
(15:26):
what's affordable and what'sdesirable?
Speaker 2 (15:29):
Well, we do suffer from not?
I don't think if you read whatthe government says in the
budget, we don't get our fairshare of GST, but I think every
government says that.
And the funding?
I think it's down to prioritiesand I think it's down to being
able to take a long-term visionof what the city looks like.
(15:51):
Certainly, in my view, the, thegovernments tend to focus on
very short term and funding inthe short term, but you, you
really are looking atmulti-generational type spends
and and not, you know,generational in terms of working
careers, not not lifespan.
So if we spread the cost andthe spend over a long enough
(16:16):
time, that gives the governmentthe ability to fund it.
But it's also involvingbusiness in there and bringing
in big business partners alongfor the ride.
Speaker 1 (16:28):
Sorry.
Speaker 2 (16:28):
public-private partnership Public-private yep,
yep, and I don't know if that'sreally explored very well in
this town.
Speaker 1 (16:36):
So opportunities to innovate and do more, perhaps.
Now I just want to come back tothe subject of innovation,
which we touched on a little bitearlier.
And obviously you know,canberra's future, I think,
hinges on its ability toinnovate and lead in key
industries.
But where do you see the focusof that innovation happening?
Speaker 2 (16:57):
Generally, as I said before, we've got a large
knowledge worker base.
Our very good public serviceemployers have spent years and
years training up and we alsohave quite a significant
university sector here, so wehave the ability to produce
those knowledge workers.
Obviously, that technologysector really jumps out.
(17:22):
We have some existing good.
You know Sebrin does a good jobat harnessing innovation but
some more funding in that areatechnology, ai and that sort of
growing sector.
Speaker 1 (17:40):
So, on the subject of higher education institutions,
obviously there's a lot ofpressure on our universities at
the moment.
How do you think the city orthe territory, and indeed
business, can foster better,greater collaboration between
those institutions and industry?
Speaker 2 (17:56):
I think overall we seem to do a pretty good job of
that anyway.
I think the ANU has certainlydeveloped as one great example,
as has the University ofCanberra, with the city fringe
type infrastructure built aroundit.
A lot of that comes down toplanning.
Some of our repurposing anyland here in Canberra is a
(18:19):
pretty difficult experience.
With our planning laws thechange of use charges can be
very prohibitive.
Your 75% betterment tax on yourlease purpose clause changes
can really be prohibitive.
So some of that streamlining,as for example and we have
(18:44):
emerging universities coming inhere as they grow the ability to
repurpose and rezone the landaround them without so much
significant cost.
Speaker 1 (18:57):
Canberra businesses have quite a strong heritage in
terms of defence and spacetechnology, which often is not
something that's particularlywell known, but how do you think
Canberra can position itself asa global leader in those
sectors?
Speaker 2 (19:10):
Yeah, that's a good one.
We do have a business RSM inCanberra is actually working
with a company that's looking todevelop a rocket launching
facility, but that's in NorthernAustralia.
So really our role shouldprobably be on that, the pivot
point between government andthose far-flung organisations.
(19:33):
We're too far away from theequator to launch anything, but
we could support themanufacturing sector, the
liaison with government, and bethat, as I said, that pivot
between international andprivate organisations and the
government.
Speaker 1 (19:49):
It's a bit of a shame really, isn't it?
It would be quite majestic tosee some rockets lifting off
from down the bottom of LakeBurley Griffin there.
Speaker 2 (19:55):
Yeah, it'd be nice, wouldn't it?
But unfortunately I think thecost of it I don't think it's
been looked at, but the cost ofit you've got to be.
There's only there's actuallyvery few points in the world you
can launch a rocket from and doit commercially well.
But that's just an example ofone of those growth industries
that Canberra has.
If you're a smart, if you're aninnovative technology-based
(20:17):
company and you're looking for asmart workforce, canberra has a
smart workforce.
So you know how can thegovernment try and attract and
offer incentives for thoseorganisations.
You know how could we attract alarge international technology
company to come in, for example,and set up and hire our local
workers?
Speaker 1 (20:38):
And that's a really good point, and one of the
things that the business chamberhas often talked about is the
need to be trying to attractmore businesses here.
What do you think are thethings that will help bring
business to Canberra?
Speaker 2 (20:55):
I think you need the basics.
You need access to housing, youneed a good healthcare system
and you need a good educationsystem.
The government has to continueto invest and spend on those
things to make it worthwhile.
As a larger employer, you wantto look at your ability to be
able to house your existingstaff that you're going to bring
(21:17):
into town and for their kids togo to school and receive health
care and education, et cetera.
But you're also going to askyourself well, who am I going to
employ for my future and whereare they going to come from?
Speaker 1 (21:31):
Now, we've talked a lot about physical
infrastructure, we've talkedabout some workforce issues, but
what about cultural initiatives?
Do you think that they enhancethe city's livability and appeal
?
Speaker 2 (21:44):
Yes, I think they do.
I think you know I mentionedbefore you know 3.8% of our
population is now Indian.
I think the increasingdiversity and access to that
provides not only entertainmentbut just better understanding of
people getting on.
Speaker 1 (22:04):
Yeah, and in terms of the arts, do you think they
play an important role inattracting and keeping people
here in the city as well?
Is there a good benefit-costanalysis for that?
Speaker 2 (22:12):
Well, yeah, you do know I'm an accountant, don't
you?
Speaker 1 (22:16):
Absolutely.
Speaker 2 (22:17):
Look, I'm sure these are topical conversations around
your summer barbecues.
Yeah, that's right.
So not a strong view on thearts.
But look, an arts and culturalsector is important.
I certainly know my wife is farmore interested in the arts
than I am, but, that having beensaid, we make regular trips up
to the Sydney Opera House, sothose cultural institutions do
(22:41):
bring people to Canberra and dohelp business.
It might not look like it.
General spend on artwork aroundis a very heated debate.
There's some of the artwork inCanberra that really does divide
people and whether thegovernment should be spending on
it.
I would certainly think, ifwe're going to spend, maybe we
(23:01):
should spend on the local artistrather than international.
Speaker 1 (23:05):
And there'll certainly be some people who
might be listening to this andwho might say well, rugby and
the need for a new stadium, orindeed sports generally, is just
the other side of that culturallens.
So some people reallyappreciate opera and will travel
to that.
Some really appreciate rugbyand will come for that too.
Speaker 2 (23:22):
Yeah, but I think the money tends to flow with the
sport, at least in the shortterm.
I've said to be quite clear,I'm a big supporter of rugby and
a stadium near the city.
I think it brings an enormousamount to Canberra.
Speaker 1 (23:41):
Now I understand you're producing, or will be
producing this year, a report onCanberra's economic future.
When's that coming out and whatcan we expect to see?
Speaker 2 (23:50):
That'll come out in the first quarter of next year
and RSM nationally has done ourleading cities reports and the
next city that we're going tolook at is Canberra.
Rsm.
We have our own full-timeeconomist, Devika, and she's
going to be looking at theeconomics and we're going to
answer some of those questions,or look at some of those
(24:11):
questions that we've touched onbriefly.
What is the role ofinfrastructure spend?
What do we need to spend on?
What is the place of Canberrawithin the Australian broader
business community?
Speaker 1 (24:25):
Excellent.
Well, we'll look forward toseeing that report when it comes
available sometime in the nexttwo or three months, I guess.
Andrew, just to sort of finishoff this chat, today you know
it's still summer, we're all outand about at the Barbies and
what have you?
What are you hoping to see thisyear for Canberra?
Speaker 2 (24:46):
This year for Canberra.
I would like to see there is alot of talk about interest rates
dropping again, economiesstarting to get more vibrant.
I think Canberra's built afantastic base.
I've been in Canberra since1981.
I've been an accountant heresince the early 90s and the
(25:08):
maturity and growth andcontinued growth.
So I'd like to see a renewal inconfidence.
You mentioned new restaurantsand yeah, we are seeing that new
venues continue to open up,that new infrastructure is being
built.
Our developers you know landsales have probably dropped off
(25:30):
a bit in this region.
Hopefully see land salespicking up and just a general
sense of confidence coming backinto Canberra again.
Speaker 1 (25:40):
Yeah, it would be really good to see a bit more
confidence coming back into themarket, and I guess one of the
challenges there, of course, isthe federal election.
Are you expecting to see a bitof a slowdown here in the local
economy as a result of theelection campaign in the
caretaker period?
Speaker 2 (25:53):
Yeah, we always suffer a bit in the caretaker
period.
Federal spending is soimportant, particularly in the
professional services sector,which has been problematic over
the last 12 to 18 months, aswe've seen.
Hopefully that starts toresolve itself and the
(26:13):
government as a customer comesto a better understanding of
what value proposition that theyare after and we can get a
little more certainty.
So, yeah, a bit of certaintywill drive that confidence.
Speaker 1 (26:26):
Excellent.
Well, we'll keep our fingerscrossed for certainty,
confidence and, indeed, a bit ofa bounce back as the year goes
on.
Andrew Sykes, thank you so muchfor joining us here on the
Canberra Business Podcast today.
It's been great having a chatto you.
You're welcome, thanks, greg.
So, thank you, andrew.
I'm Greg Harford from theCanberra Business Chamber and
I've been talking today toAndrew Sykes, the managing
partner of RSM Canberra.
This has been the Canberra forits support.
(26:48):
Don't forget that your businesscan benefit from fresh ideas
and perspectives by usingstudent interns, and if you want
to know more, just reach out tocareers at canberraeduau.
This is the Canberra BusinessPodcast.
Catch you next time.
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