A GLOBAL report into business cost factors in more than 100 cities has found Adelaide to be the most competitive place to do business in the Asia Pacific region.
KPMG’s latest biennial Competitive Alternatives Report found Adelaide to be the cost leader of six cities in the region, including Sydney, Melbourne, Brisbane, Tokyo and Osaka. It leap-frogged Melbourne to become the region’s top pick and climbed from 86 in 2014 to 23 of 111 cities worldwide in the 2016 report.
South Australian Treasurer Tom Koutsantonis said the State Government’s tax reforms, which included extending its payroll tax rebate, abolishing stamp duty on corporate reconstructions and its plan to abolish stamp duty on non-residential property transfers led to the strong result.
“These findings show that our tax cuts in the 2015 State Budget designed to make South Australia the cheapest place to own and run a business worked,” Koutsantonis said.
“The KPMG report also shows that Adelaide’s cost advantage is particularly strong in the research and development and digital services sectors, which reflects the State Government’s support of tech startups.
“These business tax reforms make South Australia a great place to start a business, and have helped us negotiate for the head offices of Oz Minerals and Investigator Resources to relocate to Adelaide.”
The KPMG study measures and provides insight on the impact of 26 key cost components, across seven business-to-business service segments and 12 significant manufacturing sectors.
All locations are compared to the US baseline, which reflects average business costs for the four largest US metro areas: New York City, Los Angeles, Chicago and Dallas-Fort Worth.
Overall, Australia rose to fifth of the 10 countries listed in 2016 behind Mexico, Canada, The Netherlands and Italy but ahead of France, the United Kingdom, Germany, Japan and the United States.
The KPMG study said the rise in value of the US dollar relative to the Australian dollar in 2015 was a major reason for Australia’s improved cost index in 2016.
However, it said other cost factors helped Australia to move ahead of France, the UK and Japan in the study.
Property Council of Australia South Australia Executive Director Daniel Gannon said the tax changes, which began last year, were “trailblazing reform”.
“Taking an axe to stamp duty on non-residential property transfers is a really positive step for South Australia as an investment destination to start pricking up the ears of investors living outside our own borders and to make sure that we are becoming more competitive,” he said.
“But we certainly don’t see this as the end game, we see this as chapter one in what is quite a long novel on how to rebuild South Australia’s attractiveness as a destination.”
Gannon said Adelaide’s small but capable size and location in the middle of Australia were advantages.
He said the growth of city apartments and major projects such as the Riverbank Precinct revitalisation had helped bring vibrancy and interest back into the city.
“What we are doing at the moment is building our brand and it’s a step by step process.”
“We need to use these development opportunities to actually start giving some of these headquartered companies more and more reasons to start basing themselves in Adelaide.”
South Australia is transforming its economy from one reliant on traditional manufacturing and mining to one that benefits from innovation and knowledge-based industries.
In 2015, the City of Adelaide launched Invest Adelaide which aims to attract foreign and interstate investment to the City in key sectors of tourism, retail, education and research, health, commercial and residential development, entrepreneurial and professional services.
“The KMPG report clearly demonstrates the extensive investment potential in Adelaide, making our city one of the best to invest in right now,” said Patrick Robinson, Senior Investment Advisor Invest Adelaide.