Mark Stone: Red tape and skills shortages are holding SMEs back

Business owner plans for government grant

While Australian small and medium enterprises need to expand as part of their bigger plan for growth, many business owners face obstacles which stop them in their tracks.

Recent findings from NAB’s Moments that Matter – Understanding Australian SMEs whitepaper echo what Victorian businesses are telling the Victorian Chamber of Commerce and Industry. The report finds that while many SME business owners believe that Australia is a great place to do business, the weight of red tape, taxation, a lack of suitably skilled workers and rising energy costs are holding them back from growth and expansion.

It is no surprise that NAB’s survey found that more than two thirds of small businesses struggle with the burden of red tape.

The Victorian Chamber has long championed business regulation reform. Most recently we have called for reforms to lower the cost and complexity of complying with regulation on occupational health and safety, agribusiness, environmental protection and small business retailers.

However, the reform task is ongoing as new burdens are being imposed every year. SMEs are still looking to governments to reduce the burden of complying with red tape and there are many opportunities to do so.

Taxation is an obvious one. We’re still dealing with the broader issue of taxation in a piecemeal way. There are about 120 different forms of taxation in Australia. Ten of those taxes — like goods and services tax, payroll tax and Pay-As-You-Go – generate 90% of the revenue and the other 110 forms of taxation generate 10%. The tax compliance burden can’t be underestimated.

If you have a business that operates across state borders things can become more difficult. For example, each state has its own formula for payroll tax, so if you operate in more than one state you have to comply to different systems with different rules and regulations.

Business also has to comply with the requirements of three levels of government: federal, state and local. There’s no doubt that we need to reduce the amount of regulation that’s occurring across these three levels, reducing overlap and duplication.

NAB’s report highlighted the impact of skills shortages on SMEs, and in particular, the need for businesses to actively focus on upgrading the skills of their existing workforces. Victorian Chamber members are telling us that this is one of their key strategies for tackling skills shortages. This is why we have been advocating strongly for more government support for businesses to upskill their staff through accredited and non-accredited training.

The cost of energy is also a prominent issue challenging many SMEs. Our members tell us that they are facing unsustainable energy price increases that are threatening their competitiveness and, in some cases, their ongoing operation. We need a long-term national energy plan, agreed and committed to by all governments, to ensure businesses have access to secure and affordable energy supplies. Right now, businesses don’t have the confidence that they will be able to access energy at an affordable price. That’s just one example of why some businesses are putting the brakes on expansion because they don’t know what’s coming next.

This is why the Victorian Chamber is urging governments to prioritise the growth of SMEs by tackling red tape, skills shortages and energy costs so that they have the best chance of future success.

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