New data from CreditorWatch found the Norwood, Payneham and St Peters (NPSP) area was the region with the lowest risk of doing business in Australia, as the rate of business failures nationally hit a dire new peak.

CreditorWatch’s Business Risk Index for August found businesses in the NPSP area had an average failure rate of 3.4 per cent over the past 12 months, below the national average of 4.95 per cent.

In comparison, the area with the highest rate of failure in Australia was Bringelly-Green Valley in Western Sydney where 8.2 per cent of businesses collapsed in the past year.

By capital city CBDs, Perth had the lowest rate of business failure at 4.08 per cent, followed by Adelaide (4.14 per cent), Melbourne (4.57 per cent), Brisbane (4.72 per cent) and Sydney (5.23 per cent).

Unley was close behind NPSP with a 3.84 per cent rate of failure but managed to secure the number two spot behind the eastern suburbs council area.

The top 10 best regions in Australia by rate of business failure. Source: CreditorWatch.

The national rate of business failure is now at its highest level since January 2021, according to CreditorWatch.

The research organisation forecasts the rate of business failure to increase by 5.20 per cent over the next 12 months.

In NPSP, the projected rate of change is 1.22 per cent to 4.60 per cent, while Unley’s rate is expected to grow by 0.84 per cent to 4.68 per cent.

No South Australian regions were in the top 10 highest-risk locations to do business in Australia. Only areas in New South Wales and Queensland were present in that list.

City of Norwood, Payneham and St Peters Mayor Robert Bria hailed CreditorWatch’s finding for the area.

“The council has always prided itself for many years on being supportive of businesses and working with businesses,” he told InDaily.

“Over the years, we’ve initiated a number of policies and actions that support business given we have a number of main streets – the most prominent being the Parade which we consider to be South Australia’s premier main street.

“But there’s other significant sectors in our council area. We have a boutique food and beverage manufacturing sector, and health and education are other big sectors. But as a Council we pride ourselves on working hard to support businesses.”

Bria pointed to initiatives like the East Side Business Awards, the Norwood Parade Precinct Committee and its Business & Economic Development Advisory Committee as key supports for local businesses.

“The other important thing we do is that we grasp opportunities when they arise,” Bria said.

“Gather Round is a classic example of the Council understanding the assets that it has and how we can utilise them to optimum effect.”

The NPSP area is enjoying increased spending too, with the most recent Spendmapp data showing total expenditure in the City rose from $1.75 billion in FY23, to $1.83 billion in FY24.

“Whilst there is a big cost-of-living crunch there are sectors in the economy, at least in the Norwood, Payneham and St Peters economy, that do continue to grow,” Bria said.

One local award-winner is Stefan Iannace, founder of Firle-based Cheeky Grin Coffee.

“This area is amazing for business, with a steady flow of new faces and ongoing developments that help places like coffee shops grow and connect with community,” said Ianacce, whose business won the ‘Best Coffee’ award at the 2024 East Side Business Awards.

“We’ve also had great support from local NPSP Council leaders, who are regular customers and always happy to chat about business and life.”

ATO debts and inflation driving business failures

CreditorWatch said the jump in the national business failure rate was driven by low levels of consumer spending, high inflation and interest rate increases.

Food and Beverage businesses were the hardest hit over the past 12 months of all industries, recording a rate of 8.2 per cent for August, followed by Administrative and Support Services at 5.8 per cent.

Meanwhile, at the other end of the scale, Agriculture, Forestry and Fishing recorded a rate of just 3.3 per cent.

CreditorWatch said the Food and Beverage sector was caught in a “perfect storm” of rising costs amid a decline in demand.

Further, the organisation said the ATO was actively chasing tax debts, which the hospitality industry has racked up over the last few years.

CreditorWatch CEO Patrick Coghlan said businesses needed urgent interest rate relief.

“One of the biggest contributing factors to this increase in our business failure rate is the lack of consumer demand,” he said.

“Consumers won’t be inclined to open their wallets in any significant way until they get a reduction in their mortgage payments.

“A couple of rate cuts would also mean that credit becomes more affordable for businesses, and they are able to get back on the growth track as well.”

CreditorWatch chief economist Anneke Thompson said businesses would be paying close attention to September’s jobs figures.

“Our data, consistently and for some time now, indicates that Australian businesses are operating under extremely challenging conditions – particularly those in the Food and Beverage, Arts and Recreation, Retail Trade and Construction sectors,” Thompson said.

“Under these circumstances, it is almost certain that unemployment will continue to rise – the question is by how much? So far, very strong public sector employment, especially in the NDIS sector, has masked weakening underlying job creation in the private sector.

“We don’t expect businesses to feel more confident until there have been at least two or three cuts to the cash rate. Unfortunately, this means it is likely things will get worse before they get better.”