Good policy's key to small business growth | OPINION

BIG TEST: New Prime Minister Scott Morrison and his cabinet have plenty of work to do. Picture: Alex Ellinghausen
BIG TEST: New Prime Minister Scott Morrison and his cabinet have plenty of work to do. Picture: Alex Ellinghausen

With the political shenanigans of the past couple of weeks hopefully behind us, it’s time to focus on policies rather than personalities. One thing all sides of politics have in common at the moment is their readiness to attack big business and their eagerness to proclaim love for small business.

The behaviour towards customers of the big four banks has understandably angered many Australians.

And in the last week, politicians have been giving energy companies a serve for alleged price gouging.

Big business is a big target, and when it does the wrong thing it should expect to be held to account, just like the rest of us.

But we need to remember that not all businesses should be punished for the actions of the few, and that small business and big business depend on each other.

When big businesses sneeze, small businesses come down with the flu.

Small business needs bigger businesses as customers for their products and services. And big businesses supply small businesses with the parts they need to build things and the goods they sell.

Small business plays a major role in the Australian economy.

Of the 10.7 million people employed in the private non-financial sector, about 44 per cent are employed by small businesses.

There are more than two million small businesses in Australia, of which about 61 per cent are sole traders.

And about 28 per cent have between one and four employees.

About 10 per cent, or 200,000 small businesses, employ between five and 19 people.

With the right policies, government can help small businesses create jobs and wealth for the community.

Smaller enterprises are more common in construction, services, retail, hospitality and transport – all sectors which are under increasing pressure and disruption.

Firstly, we need to cut red tape. Local councils, state and territory governments and the federal government are responsible for a tangle of regulation tying down small business.

We don’t need three levels of overlapping or even contradictory regulation.

The time and money involved in complying with excessive regulations could be better used to grow the business.

Red tape has a direct cost on, and alters decision-making by, business owners. While larger businesses have more people and money available to meet their compliance obligations, many small businesses do not.

Governments and councils need to recognise this and make it easier for small businesses to understand, and comply, with the law.

Secondly, our tax system should provide incentives for people to get jobs and for small businesses to spend money in their firms. The current tax system is well overdue for an overhaul.

Our income tax laws need to keep up with big changes in the way people do business and earn income.

Often, new rules and regulations get piled on top of old ones.

That’s one of the reasons why tax law is so complex, which creates unnecessary costs and confusion for small businesses, many of which need to employ specialists just to understand what’s going on.

For similar reasons, it has to become easier to employ people.

It’s a fact that Australia is a costly place for businesses of all sizes to hire, keep and, when they have to, let go of staff.

In a country with one of the highest minimum wages in the world and an average wage of more than $80,000 a year, most small business owners earn much less than the average wage. In fact, over half of them earn less than $50,000 a year.

High labour costs mean many small businesses can’t afford to open their businesses in the evenings, at weekends or on public holidays.

Which means employers, employees, customers – and even the government’s tax coffers - all lose out.

Employers and employees need a simpler workplace relations system that doesn’t require a degree in law to understand, so that they can work out mutually beneficial arrangements that suit their circumstances while enjoying the protection of a safety net.

Small businesses are victims of black spots in Australia’s infrastructure.

Operators rely on roads, rail and modern telecommunications to connect with their customers and deliver their goods. 

Yet our main roads are congested, our rail networks are under pressure and our telecommunications network is struggling to deliver secure, reliable and fast internet connections. And energy costs have been skyrocketing.

These issues can be resolved. But it will take strong political leadership that is governed by good policy, not scoring points to put down your opponent and get ahead in the latest Newspoll.

Scott Morrison’s new-look government has it all to do, but not very much time before the next election. The Opposition’s agenda has been known for some time.

Both sides need to prove that they are working for all Australians – including small business.

James Pearson is chief executive of the Australian Chamber of Commerce and Industry.