In an MYOB survey, 71% of small and medium business people said they are expecting a change in government on May 21. The trouble is there is not a lot of confidence about what happens next.
Small business started the election campaign with three key concerns: labour shortages, skills shortages and least cost routing.
All three issues have barely touched the surface of the campaign, which to be frank is an indictment on the level of debate.
Least cost routing is an understandable omission given its technical nature, albeit one that is a major cost item for small business and plagued by lack of competition.
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Both sides are committed to reform, but then again, the government has promised it since September and we’re still waiting for action.
Alexi Boyd, chief executive of the Council of Small Business Organisations Australia (COSBOA), wants more from the politicians on where they see small business in the future. Everyone talks about how important small business is to the economy but that is where the conversation ends.
According to the MYOB survey, released today: “The SME sector is divided in their opinions on the future of the Australian economy, with 41% saying it will improve in the next 12 months, 37% expecting it to decline.”
The confusion is not surprising. Interest rates are now on the way up, heading to “normal “ levels of around 2.75%, which is compounding cost pressures amid chronic labour shortages.
What could change for SMEs?
There is still over a week to go in the campaign but some pundits figure the likely result is an ALP-led minority government, which also means the final result may be unknown for a while.
Depending on how you see the world, and assuming the predictions are right and Anthony Albanese can manage the task, this could result in big changes.
More significant action on climate change is a given under this scenario.
On its present policy, the Coalition is a lost cause on the issue, but importantly, the architect of the carbon trading system that Albanese will use, which contrary to Scott Morrison’s, is a government-run scheme putting a price on carbon.
Cutting red tape is a perennial but nevertheless huge issue highlighted by the COVID-19 rules, which are compounding labour shortages.
This is just the start. As the MYOB survey noted: “Specifically, post-election SMEs would like a simplified GST/BAS reporting process and a proportion of government procurement contracts allocated to smaller businesses.”
More government support to encourage the switch to the digital economy is also high on the wish list .
The MYOB survey found 48% of small and medium businesses would vote for a government that provided greater support to improve digital capability and business skills in order to ‘future proof’ their businesses.
MYOB’s Helen Lea said: “SMEs are already using digital tools, including for tax and BAS lodgement and payments (51%), compliance (38%), cashflow, invoicing and online payments platforms (40%) and productivity, project and inventory management (29%).
“We know that once digital adoption gathers speed, the impacts are immediate and significant. This is both at an individual business level and macro level, with MYOB modelling showing a potential $10.5 billion return to the economy as a result,” she added.
A wage increase could help
Meanwhile, Judo Bank’s economic advisor Warren Hogan backs the ALP call for a big increase in the national wage as a one-off to help stimulate the economy.
Some argue Albanese should have held back and pushed instead for a 3.7% increase, that being the underlying inflation rate.
Morrison claims the 5.1% nominated, being the headline inflation rate, could push the economy into recession.
Judo’s Hogan disagrees, saying demand for staff is strong and where people can pay outside the awards they are, so wage momentum is building.
A one-off big increase in the minimum wage would boost this momentum and in the process the overall economy, Hogan argues.
Importantly, he says the answer is not to hold back wage growth but for business to invest more in labour saving technology. That is already happening but the economy needs more.
He noted in the decade pre-COVID wage rates grew at 1.3% per year, but amid the pandemic they have fallen by 5% in the last two years. Demographics have amplified the trend with baby boomers retiring increasing the depending ratio.
A walk down main street to see the number of cafes shut is evidence enough of the labour shortage.
Immigration used to supply 180,000 new workers every year pre-pandemic, and while the numbers are trickling back, the shortages are real.
Additionally, as the numbers of COVID-19 cases grows by the thousands daily, the associated regulations are also causing shutdowns throughout the economy.
The MYOB survey found that while most SMEs expect a change in government, 66% think the best policy response is to reduce compliance costs.
This starts with the COVID-19 isolation rules.
MYOB’s Helen Lea added: “We know the contribution SMEs make to the economy is widely felt and look forward to Australia’s leaders providing a fruitful and inspiring agenda to support them.”
The wait continues.