Is it that hard? For more than a year SmartCompany has been raising the alarm about the high cost of bank funding – and the lack of funding – available to small and medium business owners.
Entrepreneurs tell us how hard it is to access funds and the negative impact the lack of funds is having on their growth plans. Surveys back this up and industry groups confirm from their members this is a big problem. Despite the mounting evidence, the Labor Government has turned a deaf ear. In fact, as I wrote a few weeks ago, they pretty much deny there is a problem.
This morning there was a blazing headline in The Australian that Opposition Leader Tony Abbott has a “focus on small business”.
Great, I thought. Maybe some action at last.
And then the story that followed merely reported that Abbott was considering introducing a bank guarantee to the debts of business for funds raised to lend to small business. And then denials from a Coalition source that it will not be Coalition policy.
Now, we know that the Coalition has been sniffing around this issue. Opposition spokesperson for small business, Bruce Billson, was at a CPA roundtable I hosted several months ago, where the issue was first raised. His ears pricked up when he heard that most comparable OECD countries had introduced similar bank guarantee schemes to help small businesses. He has obviously been pedalling it through his party but it is not getting a lot of traction.
So two weeks out from an election and there is a distinct possibility that nothing is going to be done on this crucial issue.
Why is it so crucial? Very few fast growth companies can fund their growth through funds generated internally. Think about it. When a company expands, they need new premises, new equipment, new processes, new telephones, new computers, new chairs and desks. The entrepreneurs need to beef up their management teams and train up their junior staff. That all costs money.
If it is too expensive or you simply cannot access funds – and we are talking smart companies here as opposed to companies borrowing to dig themselves out of a hole - then these companies don’t create the jobs and don’t spend on capital investment. And of course these innovators can’t get their new products and services to market and challenge the old incumbents.
We are at odds with the world. While most OECD countries are looking at their smart companies to dig themselves out of a hole and create employment, Australian politicians are ignoring the growing threat to this sector.
And the situation is likely to get worse. NAB executive Joseph Healy, who recently pointed out than the banks had redirected loans away from business towards mortgages, says the problems on the global credit markets could force banks to ration credit further.
Labor has ignored the issue but I was hoping that the Coalition, which has always regarded small business as its natural constituency, would have been listening and framing policy in response. That is what I call a focus on small business.