Kevin Rudd and Wayne Swan must act NOW to help small business: Gome

All it took was a trip to the US a few weeks ago to make Kevin Rudd and Wayne Swan understand the enormity of the financial firestorm engulfing business.

All it took was a trip to the US a few weeks ago to make Kevin Rudd and Wayne Swan understand the enormity of the financial firestorm engulfing business.

They acted immediately, and what a relief they did. The questions we were being asked here at SmartCompany about whether deposits were safe in banks were alarming.

So now Kevin Rudd and Wayne Swan, you need to act again. Small business is in deep trouble in this country. Credit is coming to a screaming halt. No money means no action, and some business owners tell me that activity just went dead several weeks ago.

You have helped big business, you have helped the banks, you have helped the pensioners and carers. Now it is the turn of small business.

The announcement that you are holding a summit for small business this Friday smacks of a PR exercise and has all the hallmarks of the 20/20 Cate Blanchet talk fest. (In retrospect, it is amazing how irrelevant that was.)

You don’t need a summit. You know that small and medium business is facing a crisis. Sensis, Dun & Bradstreet and National Australia Bank have all published research showing consumer confidence and business conditions is at decade-long lows.

Business-to-consumer spending was hit first. Now that has spread to B2B. Smart businesses have already cut staff, and they are going to cut jobs further.

Today’s SmartCompany poll shows that 39% have already cut staff in the past 12 months and a further 41% are planning to cut staff in the next 12 months. Of those planning to cut, nearly 28% are planning to retrench more than 15% of their workforce, with another third planning to let go between 6% to 10%.

This is alarming as the smart companies of Australia create the majority of jobs.

So this is what you must do.

First, get on the airwaves and talk about entrepreneurs, small business and growth. Why is this important? Because the vindictive backlash is beginning, and many entrepreneurs will be lumped in with high-earning executives in financial institutions that have caused all this mess.

In the US elections it is notable how often small business is mentioned by both parties. In Australia it is notable for the absence. You must also keep the pressure on banks to pass on rate relief and ensure the banking sector remains competitive.

Second, provide tax relief immediately. Announce that you will compensate the states for an instant reduction in payroll tax for the next year. (While you are at it, maybe you could fix up the anomalies that exist with different rates and rules in different states.)

What would this do? Provide instant relief to small and medium employing businesses across the country, supply them with instant cashflow and save jobs. It would restore some confidence. If you are wondering just how much damage payroll tax does to fast growing companies, read our petition.

Third, set up some emergency assistance services for small businesses. You have taken the knife to small business services in the past year, arguing that market forces should be allowed to operate with the Government’s role to just get out of the way. Well, Craig Emerson, look where your flat earth argument got us.

Fourth, set up services for all the new “necessity entrepreneurs” that will emerge from this crisis. As big and small business continue to cut their workforces because they have no money to pay staff and those staff can’t find work elsewhere, there will be thousands of people who will become necessity entrepreneurs. We know from years of research that necessity entrepreneurs do not fare nearly as well as opportunity entrepreneurs. But some simple schemes can help enormously.

Now, you dumped about $1 billion of assistance schemes for small and medium businesses in the past year, including Commercial Ready and the 53 field officers that roamed the country assisting regional small businesses.

You also chopped NIES, the highly successful program that helped unemployed people set up small businesses. That program had been running for 23 years and 88% of people who go through NEIS were still operating their businesses three months after completing the one year program.

In its place you have set up 18,900 places made available through a revamped NIES. You have also announced new training initiatives. But how much of this money is going to assist people to start their own businesses, because jobs for a while are going to be in short supply?

So the time has passed for summits. Entrepreneurs are very resilient and are doing everything within their power to hang on to staff, preserve credit and find new revenue. But when the credit stops, so does business. And urgent action – not a summit – is the answer.