Rudd must support SME sector: Gome

In a speech this morning, Prime Minister Kevin Rudd warned voters to prepare for “unpopular decisions” while reiterating his commitment to nation building through improving infrastructure.

In a speech this morning, Prime Minister Kevin Rudd warned voters to prepare for “unpopular decisions” while reiterating his commitment to nation building through improving infrastructure.

At the same time he conceded that the global financial crisis will hit economic growth, tax revenues and lead to a rise in unemployment.

Rudd said in the speech in Brisbane that the economy faced new pressures in the wake of the global financial crisis.

“These developments will affect growth,” he says. “They will affect employment. They will affect government revenues.

“The cornerstone of this strategy is to maintain the stability of the Australian financial system – critical for the national economy, and critical for the household economy. This will require tough decisions. Some of which will be unpopular.”

While business welcomes the fillip that nation building will bring, it is a long term vision with longer term implications. Many businesses, particularly those selling to consumers, are hurting now. Businesses that sell to other businesses will really start to feel the pain next year, if they are not already.

Small and medium businesses are huge employers of staff. They are also major contributors to government coffers. And fast growing companies contribute to innovation and productivity gains.

As yesterday’s SmartCompany poll and other surveys showed recently, many in this sector are or will soon face a shortage of capital, which could cripple their operations. Adding to their concerns is the consolidation in the banking sector with smaller banks being acquired by rivals.

While the stability of the financial system is a given, the Government must ensure there is enough support so that the SME sector does not turn into a blood bath.

Yes, this is a time for tough decisions. And business owners are making them. But the Government must keep a very close eye on the financial system and ensure that capital support for small and medium business continues – and that they are not the recipients of any “unpopular decisions.”