Business groups have raised concerns about a number of proposals included in the Federal Government’s interim report for its Financial System Inquiry, including the establishment of a database of SMEs which would be available to financers.
The Financial System Inquiry, headed up by businessman David Murray, is the first inquiry into the Australian financial system for 15 years, and there are a number of potential implications for your business, from reform to the way you raise capital to the regulation of self-managed super funds.
While the report has taken aim at other elements of the financial system such as negative gearing, executive director of the Council of Small Business of Australia Peter Strong told SmartCompany the report is “very conservative”.
“Our response is that we need to look a lot more closely at any ‘unintended consequences’ of some of these reforms,” says Strong.
“The inquiry is so big and complicated so we really have to be focussed on any unpredictable negative consequences.”
Strong is particularly concerned about the report’s suggestion that a “SME finance database” could be established to “provide business-level data to lenders and potential new market entrants”. “Data could include details from tax returns and business activity statements, and financial information from lenders,” suggested the report.
“That’s more red tape,” says Strong. “We don’t want more red tape, we want less”.
Strong slammed the absence of any mention of Standard Business Reporting (SBR) in the report, which he says is “the future of communication between business and government, and between business and business”.
“It’s a huge oversight,” he says. “The idea of a register, that information could be gathered through SBR.”
However, the Australian Industry Group has welcomed the policy option, with chief executive Innes Willox saying in a statement on Tuesday “introducing a database of businesses’ past loan performance and taxation information is a worthy idea which we will raise with our members”.
But the Ai Group took issue with the report’s suggestion that “accessing external finance is not a major issue for most SMEs”.
“Ai Group members with good business ideas frequently cite difficulties getting finance from their bank at a competitive rate as a major challenge facing their business, particularly those in the manufacturing sector,” said Willox.
“So Ai Group would encourage the panel to take a wider view in its final report on the business lending market and examine measures that could encourage lenders back into this market to lift competition,” he said.
The Murray report also looked at the state of the superannuation industry, flagging possible restrictions on lump sum super payments, self-managed super funds and tax breaks for wealthy super funds as all being on the agenda when it comes to reform of the country’s superannuation sector.
While the report also hinted at taking a closer look at the high level of fees and charges paid by Australians on their super, the very fact that the inquiry is looking at the super industry has attracted support from the Association of Superannuation Funds of Australia.
“Whereas the Wallis Report said very little about superannuation, the report … recognises that superannuation has become a critical part of our economy,” said ASFA chief executive Pauline Vamos.
“Superannuation does not just hold the key to future financial freedom for Australians, as a pool of assets, it also helps stabilise financial markets in times of unrest,” she said.
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Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on Twitter at @ellykeating.
