I fear we are sleepwalking into a "big corporate" economy.
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Many small and family businesses are doing it tough right now and the post-COVID environment is, in many cases, even more difficult.
Small businesses are grappling with rising input costs, notably wages, fuel, gas, electricity, insurance and rent. And there continues to be ongoing shortages of talent and skills with lower rates of productivity putting upward pressure on labour costs.
The Tax Office has resumed its "lodge and pay" enforcement approach and those who had rent relief have found the landlord now wants to be paid. Then there is the whammy of 13 rises in interest rates by the Reserve Bank over the past two years still having an impact on the costs of financing and on customers' spending, preferences and confidence.
It's no surprise that corporate insolvencies have reached a record high and there's been a 50 per cent increase in calls to my office from small businesses worried a supplier might be insolvent or their own business might be heading that way.
There is also a growing number of increasingly complicated regulations such as a new definition of casual employment and provisions for converting to permanency; mandatory country-of-origin labelling for seafood in hospitality venues; and the prospective removal of the small-business exemption from the Privacy Act.
Together, it is taking a toll on time-poor and resource-constrained small business owners.
The ASBFEO Small Business Pulse, which is a "health check" of objective vital signs for the small business sector while also taking into account the "animal spirits" that drive decision making by the enterprising Australians, shows that post-COVID the business environment for small business is 25 per cent below the long-term average.
We need more incentives for those starting a small business, a simple, quick and cost-effective way for small business owners to settle court disputes, and more emphasis on encouraging younger Australians to consider business ownership.
After widespread consultation and investigation, my agency is outlining 14 steps designed to give more support to the nation's 2.5 million small businesses and calling on the parliament, policymakers and regulators to:
- Explore the potential benefits of a tax discount/offset scheme for new small business owners to allow them to keep more of their income to re-invest in their business during the critical first three years.
- Focus on right-sized regulation, including how regulators and government formulate and administer laws, to help, support and enable small business owners, who do not have the resources of big business, meet their obligations.
- Require every cabinet submission, preliminary and formal regulatory impact statement and new policy proposal to include a small business impact statement.
- Establish the Prime Minister's Small Business Awards to recognise and celebrate excellence and inspire the next generation.
- Give small businesses an affordable, effective and timely alternative to defend their own economic interest where fair trading protections and reasonable commercial conduct safeguards are infringed upon by creating a Federal Small Business and Codes List in the Federal Circuit and Family Court of Australia.
- Give small business a greater chance to compete for government contracts by decoding the rules and practices that favour the 'in-crowd' of familiar, established and larger suppliers.
- Make it mandatory for banks and other providers to charge the lowest fee for tap-and-go, dual-network debit card transactions as the default, saving small business around $1 billion a year.
- Undertake urgent and decisive action to ensure that essential insurances for small businesses are understandable, accessible and affordable.
- Ban unfair trading/business practices that distort competition and harm small business.
- Create a dedicated Small Business Commissioner and Division within the Fair Work Commission.
- Require digital platform providers to implement clear, appropriate and standardised procedures for timely small business dispute resolution.
- Honour businesses who fulfil their workplace obligations to employees, meet tax reporting and payment obligations in a timely way and pay small business suppliers in under 21 days, with a 'Good Business Pays' recognition and accreditation.
- Expand digital learning and practical support through business system and reg-tech solutions, information management and practical Artificial Intelligence uses.
- Develop a readily accessible and easily navigable central resource hub of actionable information, 'how to' guidance, programs and assistance developed by government and private sector specifically prepared for small business use.
There's more detail on our website asbfeo.gov.au
We need to create and nurture the spark that will inspire someone to turn an idea into investment, to build a business, to take on the risk and big responsibility of creating an opportunity-generating new enterprise, and to employ that extra person.
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Small business is rightly celebrated for generating 33 per cent of our nation's gross domestic product and providing jobs for 42 per cent of the private workforce. But in 2006, small business contributed 40 per cent of GDP and employed 53 per cent of those with a private sector job. This is a worrying trajectory.
It is not enough to dedicate enormous time to just mitigating the wind in the face of our small and family businesses. These steps can provide greater support and some much needed wind in their sails.
- Bruce Billson is Australian Small Business and Family Enterprise Ombudsman
