In Canberra, the ancient tension between what things cost and what people can bear has reached a breaking point for small business owners and ordinary households alike. Rising interest rates, fuel prices, and commercial property levies are compressing margins from above, while consumers — their own budgets hollowed out — spend less and less. The crisis has grown intimate enough to reach the family pet, with animal surrenders driven by financial hardship now ranking among the most common reasons Australians give up their companions. What unfolds in the coming weeks, shaped by Reserve Bank decis
Canberra's small businesses face squeeze as consumers tighten spending amid cost-of-living crisis
Australians are surrendering companion animals to shelters due to inability to afford their care, with pet surrenders driven by cost-of-living pressures.
Running a business costs more. Running a household costs more.
Mark
So the core problem here is that businesses are getting squeezed from both sides at once—their costs are up and their customers are spending less. Is that right?
Mimi
Exactly. Interest rates are climbing, fuel prices are at their highest in any Australian capital city, and commercial property rates jumped 8 percent this year. At the same time, households are cutting back because their own costs have exploded. So a cafe owner might be paying more to borrow money, more for petrol to get supplies, more in property rates—and fewer people are coming in to buy coffee.
Luke
But we should be careful here. The 8 percent property rate increase—is that confirmed for all of Canberra, or is that Harford's observation? And when he says sentiment is "as bad as it's ever been," that's his assessment, not a survey of all business owners.
Mimi
Fair point. Harford is the chamber CEO, so he's speaking from what he's hearing from members, not from a comprehensive survey. The property rate figure he cited is specific to this year, but we don't know if it's across all commercial properties or a subset.
Mark
And the pet surrenders—that's a real consequence people are facing?
Mimi
Yes. The RSPCA in the ACT has documented that "unable to afford care" has moved from the seventh most common reason for surrender in 2022 to the second most common in the past two years. That's a measurable shift.
Luke
But we don't have the actual numbers—how many pets, what the total surrenders are. We know the ranking changed, but not the scale.
Mark
So what's the forward risk here? What happens if rates keep rising?
Mimi
Smaller businesses with high debt and thin margins are most vulnerable. The new portable long service leave scheme will add costs for hospitality and retail employers, which could push prices up for consumers who are already cutting spending. It's a tightening spiral.
Luke
And the RBA is expected to raise rates again next week, which would be the fourth hike this year. That's the immediate pressure point everyone's watching.
Mark
So we're waiting to see if that fourth rate rise pushes some of these businesses over the edge.
Mimi
That's the real question. Harford's worried about the heavily leveraged small operators. One more shock could be the difference between surviving and closing.
The Pulse
- Canberra's small business sentiment has sunk to historic lows, with costs rising on every front simultaneously — interest rates, fuel, commercial property rates, and new employer levy obligations all arriving at once.
- Consumers, squeezed by the same forces, are pulling back their discretionary spending precisely when businesses need them most, creating a feedback loop that threatens the most leveraged operators first.
- A fourth Reserve Bank interest rate rise is widely expected, promising to tighten credit further and lift monthly repayments for households and businesses already stretched to their limits.
- The portable long service leave scheme, while a genuine gain for casual workers in hospitality and retail, adds another cost layer that business owners warn will likely be passed on to already-strained customers.
- The crisis has reached its most human register in animal shelters, where 'unable to afford care' has risen from the seventh to the second most common reason Australians surrender their pets — a quiet, irreversible measure of how far the pressure has spread.
In Canberra, the ancient tension between what things cost and what people can bear has reached a breaking point for small business owners and ordinary households alike. Rising interest rates, fuel prices, and commercial property levies are compressing margins from above, while consumers — their own budgets hollowed out — spend less and less. The crisis has grown intimate enough to reach the family pet, with animal surrenders driven by financial hardship now ranking among the most common reasons Australians give up their companions. What unfolds in the coming weeks, shaped by Reserve Bank decisions and employer obligations, will determine how many more quiet surrenders — of businesses, of animals, of stability — lie ahead.
Canberra's small business owners are caught in a double bind: the cost of keeping their operations running has climbed sharply, while the customers they depend on have less money to spend. The Reserve Bank is expected to raise interest rates for a fourth time this year, compounding pressure already built from elevated fuel prices — Canberra pays the highest petrol costs of any Australian capital — and commercial property rates that have risen around 8 percent in the past year alone.
Greg Harford, CEO of the Canberra Business Chamber, describes business sentiment in the territory as "as bad as it's ever been." His sharpest concern is for small operators carrying heavy debt and thin margins, those most reliant on foot traffic and discretionary spending — precisely the businesses least equipped to absorb simultaneous cost shocks. Adding to the pressure, a new portable long service leave scheme extending to hospitality and retail workers will require employers to register and pay a levy on eligible staff wages, a cost Harford expects will ultimately be passed to consumers.
The toll reaches beyond balance sheets. Animal shelters across the ACT have watched the reasons for pet surrenders shift in telling ways. In the 2022 financial year, financial hardship ranked seventh among surrender reasons at the RSPCA. It has since climbed to second. Families are making impossible choices between their own needs and those of their animals — decisions that, once made, cannot be undone.
With another rate rise anticipated and no relief visible on the horizon, the coming weeks will test how much more Canberra's small businesses, and the households that sustain them, can absorb.
Canberra's small business owners are caught between two collapsing pressures: the cost of keeping their doors open has climbed sharply, while the people who walk through those doors have less money to spend. The Reserve Bank of Australia is expected to raise interest rates for a fourth time this year, part of a broader effort to manage inflation driven partly by Middle East conflict pushing fuel prices higher and a tight jobs market that keeps wage pressure on. Canberrans are already paying the highest petrol prices of any Australian capital city. For business owners, the math is brutal.
Greg Harford, CEO of the Canberra Business Chamber, describes the current business sentiment in the territory as "as bad as it's ever been." The pressure comes from multiple directions at once. Interest rates climb. The cost of petrol bites into household budgets, leaving consumers with less discretionary money. Commercial property rates in Canberra have risen about 8 percent this year alone. Meanwhile, the portable long service leave scheme—which extends to hospitality and retail workers starting soon—will add another layer of employer costs. While the policy benefits workers by giving casual employees access to long service entitlements even when they switch jobs, businesses will need to register and pay a set levy on the gross ordinary wages of eligible staff. Those costs, Harford notes, often get passed along to customers.
The squeeze is most acute for small operators with thin margins and heavy debt loads. "My real worry is for those small businesses that are heavily leveraged, they've got very small margins, they're very reliant on customers coming through the door and spending, and those are the ones that are most at risk in the current situation," Harford said. Retail, hospitality, and services sectors face the sharpest headwinds. The problem is not one thing going wrong; it is everything going wrong at the same time. Running a business costs more. Running a household costs more. Neither trend shows signs of reversing soon.
The human toll extends beyond balance sheets. Animal shelters across Australia have been overwhelmed as Australians make impossible choices about which expenses to keep. In the ACT, the RSPCA has tracked a stark shift in why people surrender companion animals. In the 2022 financial year, "unable to afford care" ranked seventh among surrender reasons. By the past two years, it had climbed to the second most common reason people hand over their pets. Families are choosing between feeding themselves and feeding their animals. The decision, once made, is irreversible.
What happens next depends partly on decisions made in the coming weeks. The Reserve Bank is widely expected to raise rates again, tightening credit further and raising monthly repayments for businesses and households already stretched thin. For Canberra's small business owners, each rate rise is another weight added to an already crushing load. For the animals arriving at shelters, the cost-of-living crisis has become a matter of survival.
Notable Quotes
Business sentiment in the territory is currently 'as bad as it's ever been'— Greg Harford, CEO of the Canberra Business Chamber
My real worry is for those small businesses that are heavily leveraged, they've got very small margins, they're very reliant on customers coming through the door and spending, and those are the ones that are most at risk in the current situation— Greg Harford
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