ECONOMIC AFFAIRS: by Ken AldredNews Weekly
Small business -- too big to ignore
, July 6, 2013
Small business is the key driving force of economic growth, employment and entrepreneurial innovation in Australia.
Across the nation two million small business operators employ seven million Australians. Straddling all industry sectors, small business time and again throughout our history has demonstrated its resilience and cleverness in adjusting to difficult and changing times.
Major corporations often move sluggishly to adapt to changing markets. Classic illustrations of this are the ways in which Ford and Holden failed to exploit the growing importance of the fuel-efficient small car; Myer and David Jones woke up late in the day to the explosion of online purchasing; and Fairfax never really adjusted to the digital-age.
These failures in corporate thinking and planning have also had tragic consequences for much of their respective workforces, as thousands of employees are laid off.
In contrast, an alert small business is closer to its market and clients, picks up the trends more quickly and moves to exploit them expeditiously. This capacity to think laterally, and subsequently to flexibly provide products and services to suit demand, is a critical cornerstone of successful small business operations and is what distinguishes small business so much from many, if not all, of the major corporations.
This unique characteristic of small business will become even more important in the rejuvenation of Australia’s manufacturing, agricultural and services sectors as they move to fill the vacuum left by the contraction of the mining industry.
Realisation of these important shifts in our economy has prompted the Australian Chamber of Commerce and Industry (ACCI) to launch, in April this year, its exciting grassroots election year initiative: “Small Business. Too Big to Ignore”.
At Homebush, a suburb in Sydney’s inner-west, more than 700 small business people came together to participate in the ACCI’s campaign launch.
The first two months of the campaign saw 20,000 active voices join the campaign via the website, www.toobigtoignore.org.au. This has included some 10,000 Facebook supporters participating in the campaign, which shows both the strength of small business motivation and the growth of social media for public debate.
The CEO of ACCI, Peter Anderson, has taken the campaign to Canberra, including the leaders of the major political parties.
On June 12, 2013, he presented the ACCI campaign’s objectives to the National Press Club in an incisive and forthright address.
In his introduction Mr Anderson said of the many small business people present: “You personify what makes Australia strong — your enterprise and effort (and) your willingness to take personal risk and make something of an idea.”
However, he qualified this by saying: “It seems you’re in business despite governments, not with their assistance.... I’m talking about the actions of government and how your interests usually end up on the losing side when hard choices are made.
“Instead of enterprise being rewarded, it’s taxed. Instead of allowing success, it’s redistributed. Instead of (receiving) thanks for employing, you’re demonised as an exploiter, and now a bully.”
Central to the ACCI campaign are its four key policy objectives, or as ACCI calls them, “The Big 4 You Can’t Ignore”.
1) Cutting red tape
The first of these is to cut down on red tape, including making government administer superannuation and paid parental leave payments. Small business people are repeatedly asked to be the unpaid paymasters for government schemes, when they should instead be focusing on creating more jobs.
ACCI argues that there should also be sunset provisions for all business legislation and regulation, as well as having a one-in one-out rule that actually works. Too often, acts of parliament are used as dumping grounds for bright and not-so-bright ideas. Even good legislation becomes dated, and over the years the accumulation of outdated laws adds up to become a real burden. An old rule must be dropped, says ACCI, before a new one comes in.
Moreover, ACCI contends that there is a vital need for political parties to support more small business people as candidates, as the great majority of parliamentarians and public servants have never had any experience running a small business.
2) Simplifying taxation
ACCI’s second key policy objective is to simplify the tax system. Peter Anderson and his colleagues have called for an initial reduction, and eventual phasing out of, payroll tax. They argue that it is a tax on jobs and inhibits successful small businesses from growing into larger ones.
As part of tax simplification, it is proposed that quarterly company and income-tax collection be restored. Forcing medium businesses to collect and make monthly payments is unnecessary and unfair and puts pressure on their small business suppliers.
In addition, support should be given to a trial of a small business credit guarantee. Credit is often difficult to get from financial institutions nowadays, and easier access to finance is crucial to the development of small business.
Finally, in respect of this policy objective, ACCI states that governments need to pay bills on time or pay interest. When governments don’t pay on time, this effectively becomes a tax on small business.
3) Making job-creation easier
ACCI’s third key policy objective is the proposition that it should be made easier for small business to employ people. To help achieve this, ACCI argues that penalty rates should be more realistic so as not to make businesses unprofitable. They rightly say that many small businesses are unable to open on weekends, evenings or public holidays because of unrealistic penalty rates. Customers then miss out and governments lose revenue.
Also, employers and employees should be able to make agreements with the protection of a safety net. One size doesn’t fit all circumstances. Employees and employers must be able to enter into mutually beneficial agreements with the protection of a general, no-disadvantage safety net.
It is important as well to guarantee a person’s right to work as a self-employed independent contractor. Union bargaining demands should be directly related to employment relationships so as not to discourage the use of contractors who are also small businesses.
Likewise, increases to superannuation costs for small business need to be offset with income tax cuts. Payment for the retirement of others is a cost to small business and has to be counter-balanced to avoid a negative impact on the firm’s bottom line.
4) New and better infrastructure
The last of ACCI’s four key policy objectives for small business is also crucial for the economy at large — the need to build better infrastructure.
Here ACCI is very much in agreement with organisations such as Engineers Australia whose policy papers in recent years have put forward a well-documented case that Australia is decades behind in infrastructure creation. This is because governments of all persuasions have been too caught up in recurrent expenditure for programs of often doubtful benefit and through a fear of coming into conflict with the Greens and the radical environmentalist lobby.
ACCI declares: “Our roads are congested, our ports bottle-necked and our rail networks groaning with overuse. Energy costs are skyrocketing and making us less competitive. This affects us all, but it is particularly hard on small business. It’s time to actually do something about it. Let’s build new and better infrastructure.”
ACCI has laid out a clear, well-researched and compelling case for promoting small business. In this election year, the major political parties would do well to give it serious consideration for all our sakes. The silent majority is no longer silent.
Ken Aldred is a former federal Liberal member of parliament for Victoria and former chairman of the Coalition Small Business Committee. He has been the proprietor of his own small business, the Victorian Equestrian Centre in Upper Beaconsfield, Victoria, for the past 17 years.