Business Advice

Peter Strong: Why 2018 was a good year for most small business owners

Peter Strong /

small business

COSBOA chief executive Peter Strong. Source: AAP/Joel Carrett.

There is no doubt 2018 was a year of good outcomes for small business owners in Australia. If, for no other reason, because the year ended with a big focus on the mental health of the self-employed. But there are plenty of other reasons we should be pleased.

In 2018, the government focused on growth for the economy through small business. As a result, our economy is now well placed to build on the innovation and energy provided by the 2.5 million self-employed Australians. The budget deficit will soon be a surplus giving more momentum to small business owners to start up, innovate and grow if that is what they desire.

This focus on our sector certainly does not mean all small businesses are well off, but it does provide motivation to develop new products and processes. Those struggling must never be left behind or dismissed as ‘collateral damage’ of market forces, because they likely employ people who will also become collateral damage. Support and consideration for those experiencing the downside of change is not misplaced or a weakness, it is the sign of a healthy society.

This year included yet another bout of political mayhem with the removal of an incumbent PM and all the associated bedlam. This also resulted in a change of small business minister, with the redoubtable Senator Michaelia Cash now the minister. As much as it is annoying to see so many ministers going through the position, on the flip side, our current small business minister (who has quickly delivered good policy) and two previous small business ministers (Michael McCormack and Kelly O’Dwyer) are now all in cabinet. That isn’t a bad brains trust.

In the ALP we know Bill Shorten and Chris Bowen understand small business and the economy. We have previously worked successfully with Brendan O’Connor when he was small business minister in the Gillard government. The concern we have is in certain factions of the ALP, such as those in the ACTU, whose proposals, if implemented, would be unfriendly to small business and potentially affect mental health, employment and innovation in general.

We, however, continue to have a champion for small business in Julie Owens, the ALP member for the federal seat of Parramatta. Julie Owens gets small business and importantly also understands the role and importance of small business associations. If there is a change of government we fully expect that Owens would be the new small business minister  any other result would just be a case of factional needs beating the needs of small business people and the economy.

The Greens continue to have good policies for small business, particularly in relation to superannuation, contract law and competition policy. The Centre Alliance Party is always in sync with small business people, although we aren’t yet convinced some members fully understand the difficulties of managing superannuation payments for employers. Pauline Hanson and her team, as always, ‘get’ small business.

The greatest advocate we had during the year was, of course, the Australian small business and family enterprise ombudsman Kate Carnell and her hard-working, passionate and clever staff. This office is vital to our economy and we hope to see it receive more resources and more power. The same applies to the various state small business commissioners. I will posit that one reason the economy continues to do well is the highly professional teams of the ombudsman and commissioners doing their jobs with expertise and success.

Here is a summary of outcomes, good and bad, from 2018.

Mental Health

We have received a strong, well-supported focus on the mental health of the self-employed. This is so important. If there are five people in a workplace and we only consider the health of the four employees and ignore the health of the owner of the business, we not only let down the owner and the owner’s family, but we also put the jobs and health of the four employees at risk. This is an important issue.

Taxation

We saw the definition of a small business for access to instant tax write-offs increase from $2 million to $10 million. We also welcomed the company tax cuts for businesses with a turnover of up to $50 million, which will help small businesses reach the internationally competitive tax rate of 25%. We do need that cut to be extended to all businesses.

Royal Commission

The financial services royal commission ran its course and we are all waiting with fear and trepidation to see what the final report will recommend and the effects of the recommendations. It is clear the banks have not shown the respect needed to our laws, our society and our business community. One outcome is the banks have been spooked and funds available for small businesses to purchase assets and grow have dried up.

Access to finance

With access to finance an issue, we have developed a deep engagement with the RBA and the government on small business financing, with the resulting recent announcements on the securitisation of loans for smaller banks and the development of a Business Growth Fund. We note the opposition has expressed support for these decisions, depending upon the detail.

Superannuation

On the superannuation front, we do hope the royal commission and also the Productivity Commission recommend employers be removed from collecting superannuation and the ATO be tasked with remitting money to superannuation. That would save superannuation funds over $500 million a year in admin fees, give employees more certainty over where their funds are and let employers focus more on their business and on job security. It’s a no-brainer to change the collection process but those with vested brains (who make money from the complexity) continue to resist change.

Energy costs and reliability

The disappointments and the wins that come from the energy policy debates are there for all to see. This is one area where the far-right and far-left troglodytes should be locked in a phone booth while the rest of us solve the problem. We will get there, but the journey has been too long and too nasty. We note there are some $16 billion of renewable projects in the pipeline which is good news and also demands professional management of change.

E-invoicing and B2B

We have worked hard on developing the next generation of B2B communications and processes. This has been based mainly on e-invoicing and will expand to include all B2B activities, and success will be built upon a partnership between Australia and New Zealand. Have no doubt it has been the small business community, the various associations (particularly the Certified Bookkeepers), and business software developers who have driven this to the point where Australia is the world leader on B2B communications and interactions.

Late payment

We continued to work with the BCA on getting big businesses signed up to the payment code and paying small businesses on time (within 30 days). Many have signed but, disappointingly, many also didn’t. The government has now leapt into the fray and will hopefully get the culture change we need from the biggest multi-national organisations who need to show respect to small business suppliers and pay them on time.

Vocational Education and Training

The continuing crisis of Vocational Education and Training has another review, this time from ex-New Zealand minister Steven Joyce. This problem isn’t just about apprenticeships. It’s about developing skills that benefit all business, all workers and the economy. It’s about training organisations and apprenticeship centres focusing on the needs of business and workers, not on their own internal needs. The increase in the production of renewable energy sources has created an immediate skills crisis that must be confronted. We continue to be disappointed with the Australian Skills Quality Authority. A quality system needs a regulator engaged with the industry.

Government-funded employment services

Our continuing concern about the lack of effectiveness of government-funded employment services has resulted in a recently released report on how government can better service the unemployed. We know unemployed people must be given the skills needed by employers, and until the employment services become community-focused, we will not have an effective system.

Women in business

We have also been supported by the government to start a program of support for young women and girls still at school with entrepreneur and business skills. The future of the modern economy depends upon harnessing all our capabilities, and for too long women have been stereotyped away from pursuing a future in business. We intend to un-stereotype that view.

Why small business health is important

If it has been a good year for most small business owners it means it’s more likely others will have had a good year. That includes employees, families, communities, local charities, local sporting teams and local culture. And even many big businesses who need small business to survive and thrive.

Our small business community includes as a short (and incomprehensive) summary: newsagents, hairdressers, bookshops, pharmacists, small supermarkets, butchers, asset finance brokers, specialist human resource advisers, communication contractors, micro businesses, regional business, servos, farmers, owner drivers, real estate agents, IT experts, panel beaters, horticulturalists, nurseries, traditional medicine providers, financial advisers, stock-takers, bookkeepers, accountants, doctors, specialists, motel owners, taxi drivers, recyclers, cafes, pubs, restaurants, printers, candlestick makers, tinkers, tailors, spies, sail makers, artists, actors, proofreaders and the list goes on and on and on and on.

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Peter Strong

Peter Strong is chief executive of the Council of Small Business of Australia.

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