A first step is for politicians to get real about small business and the important role they play in our economy. There needs to be recognition that the majority of small firms are little more than self-employed people or the leaders of small teams (often families). Unlike larger firms they do not have the systems or personnel to undertake all the compliance work required in the management of various national schemes such as superannuation, industrial relations and maternity leave.
Both sides of politics make claim to be fighting red tape, or green tape in the case of the opposition. This is a mantra that has been chanted by almost every government for decades. That it remains an issue reflects the challenge of actually defining what the problem is, then finding ways to take action. Many red tape problems stem from Australia’s federal system and require better coordination between state and federal authorities.
Some useful work has been done via COAG in this regard, but it remains a major issue and involves some fundamental adjustments in the interrelationship between the various levels of government. What small businesses need from politicians is for them to fight for a fairer system that recognises their disadvantage in relation to dealing with compliance costs.
The appointment of Mark Brennan as Federal Small Business Commissioner was a positive step. However, he does not have sufficient legislative power to take action and is at risk of becoming little more than a toothless tiger. A more empowered Small Business Commissioner would have the authority to lead real change in taxation reform, the regulation of poorly regulated industries that contain many small firms, and the development of small business impact assessments.
Another key area that needs attention is finding ways to help SMEs become more actively engaged in e-commerce. Data from Telstra Sensis and the ABS suggests that while most Australian SMEs have internet access and a website, only a minority are actively engaged with e-commerce. Further, 67% expressed a lack of knowledge or expertise in engaging in this.
The rollout of the National Broadband Network (NBN), despite criticism from the opposition, is a significant opportunity for Australia’s SMEs to embrace a digital future. More attention needs to be given to this and to finding ways to assist small firms to compete within a market place that is online, mobile and global.
The proposal by the federal opposition to increase the total number of small business start-ups in Australia may have some merit, but it overlooks the fact that Australia already has a very good track record in business creation when compared to many other countries. Further, the global financial crisis (GFC) of 2008-2009 had an impact on Australia — there was negative growth in the number of new firms established. This recovered in 2010-2011, but it explains why small business creation was stronger during the era of Prime Minister John Howard.
What is also often ignored is the “leakage” of jobs since the GFC and the trend towards start-ups that employ little more than the owner-manager. Rather than a concentration on the creation of new businesses, there should be more attention given to finding ways to sustain and grow our existing ones, particularly the mid-sized firms or “Mittelstand” that have proven so important to the economic performance of a country such as Germany.
In August 2012, the Prime Minister launched the report from her Manufacturing Taskforce, in which many recommendations for assisting SMEs were discussed. Given the challenges facing our manufacturing sector and the importance of it for our economy, it would be good to hear something from both sides of politics as to how the recommendations from this report might be implemented.
Key issues raised by the Taskforce Report were the need to encourage more engagement between SME manufacturers and universities, the role of design and the development of smarter workplaces. It also acknowledged that innovation is not restricted to high-tech industries, but should be encouraged across all types of business.
Politicians often view small business in a similar manner to mothers. They like to be photographed with them and they all acknowledge their importance. However, just as all mothers are not the same, all small firms are not the same. Small business policy is a challenging and complex area that encompasses a wide range of ministerial portfolios, government agencies and jurisdictions. Small firms lack the political lobbying power of big business and the unions. Their role in the national economy is too important to be left to a few motherhood statements about cutting red tape, tinkering with the tax system and encouraging entrepreneurship.
Tim Mazzarol is the Winthrop Professor of Entrepreneurship, Innovation, Marketing and Strategy at University of Western Australia. This article first appeared on The Conversation.
