Last week, former deputy prime minister of Australia, and current member of the Morrison government, Barnaby Joyce, made a number of contemptuous comments to small businesses, lecturing them to stop relying on welfare to survive and “stand on their own two feet”.
His comments came at a meeting organised by Tamworth’s Business Chamber of almost 100 local businesses and indicate how completely out of touch the government is.
These comments come as the Morrison government begins to withdraw vital economic support.
Both the JobSeeker support and JobKeeper wage subsidy have now been cut, which will see billions of dollars ripped from local economies and small businesses around the country.
Times are tough for small business, they are struggling to survive.
They face the worst recession in almost a century, and a global pandemic, which has meant complying with forced government restrictions in the form of social distancing rules, border and movement restrictions, and the imposition of temporary business shutdowns.
Now is the worst time to cut support for small businesses.
Moreover, small businesses don’t deserve to be besmirched by members of the government for relying on crucial support in order to weather government-imposed restrictions.
Last week, Treasurer Josh Frydenberg announced changes to insolvency laws aiming to help small businesses restructure or fold, which federal Labor welcomes.
Changes to bankruptcy processes are complex and require extensive consultation and caution, so it is concerning that industry leaders have already declared the Morrison government’s consultation inadequate.
Industry leaders have already warned of unintended consequences of rushing through changes to insolvency laws.
Concerns include enabling small businesses to accumulate unsustainable debt, and allowing dodgy companies to continue to operate.
Another concern is that creditors, which can be anything from banks to employees, suppliers or subcontractors, may end up getting nothing as businesses continue to trade and pile up more debt.
It has been reported that Australian Restructuring, Insolvency and Turnaround Association chief executive John Winter bagged Josh Frydenberg’s statement that the reforms “draw on key features of the US Chapter 11 bankruptcy process”.
Winter said: “That’s just the Treasurer showing he doesn’t know what he’s talking about.”
In addition to concerns raised by industry, Labor has a number of questions that still need to be answered including:
- The government has said that for a debt and restructuring plan to be put to creditors, employee entitlements that are “due and payable” must be paid, but what risks are there for employee entitlements that accrue after a restructure?
- Will there be impacts on access to and expense of credit for small businesses in the future?
- The government says there will be safeguards against illegal phoenix activity, so why has the government been slow to address illegal phoenixing, and refused to address high-risk industries such as construction?
- Why hasn’t the government responded toBruce Whittaker’s 2015 Review of the Personal Property Securities Act 2009 report, which would help protect SME creditors?
The government needs an overarching plan for small businesses, not just a nip and tuck here and there.
Insolvency reform must be accompanied by other policy initiatives, such as improved payment times so small businesses get the simple entitlement of getting paid on time, and tackling unfair contract terms.
The Liberals have a poor record of delivering small business support, voting against improving payment times for small businesses and with only $1.8 billion of its $40 billion SME loan guarantee out the door.
In April I wrote to Assistant Treasurer Michael Sukkar suggesting the government introduce a voucher scheme for accredited accountants and professional service providers to assist small businesses with the JobKeeper payment scheme and cashflow boost measure.
The scheme would help businesses access professional and accurate information on how to access support, including advice on interactions with the ATO.
We are still yet to hear back from Sukkar.
Australians deserve a plan from the Morrison government to promote growth, protect and create jobs, support small businesses and set us all up for the recovery.