Federal small business minister Brendan O’Connor has said that the government is analysing overseas examples to find a solution to the funding problems faced by small businesses at the hands of Australia’s “risk adverse” banks.
O’Connor said that he was assessing models used by other countries to spur investment in early-stage businesses, although he said the government had not settled on any particular initiative as yet.
Schemes that Australia could turn to include the UK’s Enterprise Investment Scheme, which gives tax breaks on investment of up to 2 million pounds a year.
However, O’Connor ruled out the establishment of a small business bank, a concept that has been rolled out in the UK and Canada.
“Banks are risk adverse which I can understand up to a point because it costs them more to assess and lend lots of different small business applications,” O’Connor told StartupSmart.
“But I’m not sure the banks have done enough to lend to small businesses and we need to think of ways to encourage them to do so.”
“We won’t be creating a bank but there are a number of models we’re looking at. We’re not in a position to say what, at the moment, but there are international comparisons we can look at that can make banks more attentive and sympathetic to small businesses.”
“We are looking at a full complement of options. It’s worth bearing in mind that we did underwrite the banks during the GFC, and rightfully so. We were there for them and now we want them to be there for small businesses. It’s an issue that needs to be looked at.”
In a wide-ranging interview with StartupSmart, O’Connor said that the carbon tax was becoming less of a contentious issue for small businesses, but admitted that overall business sentiment was “lower than we’d like.”
He also defended the lack of a comprehensive government strategy for start-ups, unlike the publicly and privately backed programs seen in the US and UK.
“We want to create incentives, but Australians aren’t reticent to start-up – there are a lot of businesses launching,” he said.
“If you make it too easy to start-up, it opens up the possibility of making the wrong decision. We want people to go into it with their eyes open.”
“The government can only do so much and we have be very careful with taxpayers’ money. We have to be responsible and a lot of the programs you mention overseas are in economies that have crashed and are looking to do something to recover. We are in a much stronger position.”