Predictions for Regional Australia in 2022

Looking at regional Australia, 2020/21 saw some communities face floods, mouse plagues and the fallout of the global pandemic that hit the tourism sector hard.

Other regions enjoyed a bumper agricultural season, with prices the highest they have been in 30 years. 

To kick off 2022, the Restructuring and Recovery team interviewed Principal Tim Gumbleton FCA, who has been regionally-based with RSM since 2008.

He grew up in a small town of 1,016 people (2011 Census) in the Riverina region of NSW and is a self-proclaimed ‘sports nut’. He is a big believer in the strength and resilience of regional communities. 

In our 100 year history, RSM has always been committed to regional Australia, and we currently have 32 offices in city and regional locations throughout the country. 

Read this brief and insightful Q&A with Tim where he explains why we can expect to see a varied landscape of prosperity and despair for regional business owners, driven by factors including geographical location and business sector.

Q: What do you think 2022 will look like for regional Australia?

Tim: I think we can expect to see a varied landscape of prosperity and despair, driven by factors including geographical location and business sector. 

For example, we are seeing some of the regionally-located tourism operators continue to struggle (hopefully the border decisions will now help) to financially recover from the pandemic-induced lockdowns.

On the other hand, the agricultural and property sectors are generally thriving - despite supply chain disruptions, high inputs, lack of staff and unseasonal heavy rainfall in some locations.

Q: What are some of the commonalities you are seeing throughout regional Australia?

Tim: Our Restructuring and Recovering team work with individuals, business owners, Not-for-Profits - the whole gamut.

We cover regional locations from Dubbo to Dapto, Brewarrina to Mildura, Geraldton to Cape York and everywhere in between. It really is a varied economic picture emerging. 

Generally speaking though, people living in regional Australia are known for being resourceful and resilient people - they know what it's like to live with a level of uncertainty, whether it be due to climatic events or cash flow challenges. 

All regional businesses, regardless of whether they are struggling or thriving, should have a plan in place with options that reflect various scenarios. There are great opportunities but also significant risks.

Q: What trigger events do you commonly see in regional Australia that mean people need business recovery or insolvency support?

Tim: Even long-standing, successful business owners can find themselves in financial distress. It’s often a domino effect that can see things get out of control quickly.

It may be a partnership or family business succession dispute, a key player in the business becoming seriously ill, the failure of a significant client and associated bad debts, regulatory change, fraud, the loss of a funding agreement or unforeseen events like the pandemic or natural disasters that take a huge toll on people’s cash reserves and mental health. 

I had a client who I supported through insolvency recently who had to close his business due to a major highway diversion that saw his business bypassed by traffic. Unfortunately, things can unravel quickly in some situations.

It’s always best to seek advice as early as possible.

Q: Are regional businesses experiencing a skills shortage?

Tim: Absolutely. Human resourcing has been a significant challenge for many regional businesses, particularly during the last couple of years with lockdowns and border challenges.

Roles including fruit picking to cafe service, aged care providers to professional services, have all been tough - if not impossible - to fill in many regional locations.

Not having enough people, or the right skills in a team makes running a business very difficult.

It’s great to see some innovative and collaborative recruitment ideas being shared by Government organisations such as Regional Development Australia and in forums such as the Sustainable Economic Growth for Regional Australia conference.

Q: Regional property prices have surged too. Do you see that as a good thing?

Tim: It depends on who you ask!  In some regional areas price growth has outperformed the capital cities.

If you are a homeowner, there is certainly some optimism about the competitive interest in properties in regional locations.

For those who are renting or locals trying to secure their first home, the rapid price increase is worrying, noting the associated rental property shortage.

My family and I love living and working from our regional base in Port Macquarie and before that in Wagga Wagga. I’m not surprised more people are seeking out this lifestyle.

The pandemic has certainly fast-tracked attitudes towards using technology to achieve work/life balance.

I grew up living the regional dream and haven’t left other than relocating recently from the country’s food bowl to the coast. I get the best of both worlds though, as I spend significant time across the regions and in the cities for work and other commitments.

Q: How do you think regional communities are holding-up generally?

Tim: The last couple of years have been very tough for some small business owners and I think the fatigue factor is coming into play.

I’m working with people who are tired, stressed, and trying to understand what their options look like in 2022.

When you feel that way, it’s easy to take your eye off the ball and miss opportunities to make informed and timely business decisions. 

That’s why I love my job; I get to be an advocate for business and their people.

To help everyone understand their options, see a way out or to take advantage of an opportunity - whatever the financial outcome may be. I don’t just look at the first, most obvious solution - I explore all the available options. 

Everyone has a different story, and at times unique challenges, and I enjoy collaborating with them to find solutions. Being part of regional Australia is special.

Q: When do people typically contact you for business recovery or insolvency advice?

Tim: Generally speaking, our team tends to be contacted too late in the piece, when someone is suing the business, the ATO or Workers Compensation issues a demand, wages have become hard to pay, the bank raises concerns, their landlord is chasing payment and threatening lockout or repossessions are occurring for financed assets such as cars.

At times if we could just turn back the clock and see the client earlier we would successfully be able to turn their business around or at least identify the signs of an unviable business and limit the damage.

Get in touch - the earlier the better.

Understanding your financial options gives you back some control, even if things are really tough.

We can’t guarantee we can save your business, but we can promise to make the process as clear and simple for you as possible, every step of the way. 

Know your options - take the quiz today! 

FOR MORE INFORMATION

For more information on understanding your financial options, please contact Tim Gumbleton or your local RSM office. Free, initial phone consultations are available and all communication with our team is strictly confidential.