The big issues for SMEs in election 2007

After months of shadow boxing between the major parties, yesterday’s events revealed two things: first, that we face six weeks of intense political argy-bargy in the lead up to polling day on 24 November; and second, that SME issues will be central to the outcome of this election.

John Howard made clear his intention to make SMEs a focus of the coalition campaign in his first campaign speech yesterday. “There is no reason why Australia’s unemployment cannot have a three in front of it. If Labor is elected, its anti-small business policies mean unemployment will rise,” Howard said.

The implication in Howard’s comment is clear – SMEs are crucial to employment in Australia, and any change to the Coalition’s industrial relations laws will put a handbrake on their ability to do so.

While industrial relations will clearly be one of the big issues in the election, it is one where both parties have already clearly articulated where they stand. On a range of other crucial issues to SMEs, however, we are likely to hear more from both parties in the coming weeks.

Tax is likely to be the area where we will see the most movement. Labor has yet to say anything substantive on tax, but shadow treasurer Wayne Swan last week indicated he is keen to make changes to create incentive “all the way up the income scale”.

The Coalition, on the other hand, already announced significant tax cuts this year in the May budget. If Labor makes a campaign tax cut promise, however, it is unlikely the Coalition will be able to resist doing the same.

Red-tape reduction is, arguably, the biggest sleeper issue. Many people outside the SME sector have no sense of the costs associated with government red-tape; within the SME sector, there are few bigger issues.

Labor has already announced that it will have a “minister for red-tape”. The Coalition is likely to come back with a commitment of its own in the weeks ahead.

A fourth key area of difference is broadband. The Coalition has already put its tender process in place for a privately funded broadband network, but will be under pressure to give voters a better picture of the kind of network we can expect. For Labor, a publicly funded broadband network is locked in – but what strain will the $4.7 billion price tag put on its election costings?

And a final key area is industry and R&D. Labor has hinted at changes to R&D tax concessions and the Export Markets Development Grants scheme – it will have to come up with something substantial to counter the Government’s $1.4 billion industry package announced earlier this year.

Action in all these areas will be needed by the party that seeks to attract the support of SME owners. And we know, more than is usually the case, that support is up for grabs: a SmartCompany–Roy Morgan poll of 769 small and medium businesses last month found a relatively low 51% say they will vote Liberal, compared to 35% who say they will vote Labor.

The Coalition will want to win back the support of its heartland, while Labor will push hard to prove it deserves to be trusted with a chance at government. In just six weeks, we will know the answer.