Small business policy for 2013: What should be on the list?

Last Wednesday, Prime Minister Julia Gillard announced the start of what is set to be Australia’s longest election campaign. Set for the 14th of September, it will last approximately eight months.

One of the justifications given for having such a long campaign is the Prime Minister’s desire to see a robust discussion over policy issues.

For many weary voters, this will be a welcome relief from the bitterness and personalised attacks that characterised so much of the national political scene in 2012. One area that is likely to shape up as a key battlefield is small business policy.

Both the government and the opposition have indicated their desire to help the small business sector, and have outlined policies they hope will demonstrate they can deliver real benefits. So what should the focus of small business policy be for the 2013 election?

How important is small business to Australia?

It is probably worth reminding ourselves just how important small business is to Australia’s economy. Small to medium sized enterprises (SMEs) – which are those employing fewer than 200 people – comprise around 99% of all businesses in Australia. They also employ around 65% of the workforce or about 2.8 million people.

According to the Australian Bureau of Statistics (ABS), there are just over 2 million small businesses in Australia with less than 20 employees. Of these 1.3 million (64%) are non-employing firms that comprise only the owner-manager. In terms of economic contribution Australia’s small businesses contribute around 20% of GDP and 34% of the value added within our private sector. Around 40% are actively engaged in some form of innovation.

Unlike many of our larger firms, 97% of our SMEs are wholly Australian owned, and only 15% have sought assistance from the government. Yet 35% have reported a decrease in their profitability in recent years.

What then should this engine room of the national economy expect from our political leaders?

What’s on offer?

We are undoubtedly going to hear more about small business policies from both sides of politics as the election campaigns unfold. However, we have some indication of the battle lines from the policies already announced by the government and the opposition in recent months.

For the federal government, initiatives over the past year include the elevation of the Small Business Ministerial Portfolio within Cabinet and the appointment of a Federal Small Business Commissioner. It has also been active in working via the Council of Australian Governments (COAG) to find ways to cut red tape. This has taken the form of streamlining access to information via online systems such as the Australian Business Licence and Information System (ABLIS).

The government has also made some changes to the taxation system, reducing the company tax rate for SMEs from 30% to 29%, and enabling small firms to instantly write-off assets they buy that are worth up to $6,500 in value. Other initiatives include the Enterprise Connect support program, the national Small Business Support Line, and the review of the Franchising Code of Conduct.

For the federal opposition, the focus, as outlined in their policy statement “Real Solutions for all Australians”, aims to lower taxes and charges, cut red tape, review competition laws and policy, and extend the unfair contract protection currently available to consumers to small businesses.

The Coalition also seeks to double the annual rate of small business growth. This last policy proposes to add 30,000 new small businesses each year to the Australian economy, or double the rate that has been achieved under the current government.

In many respects, the policies of the government and the opposition have more in common than they may wish to acknowledge. Both seek to champion the fight against red tape and both have offered only very modest changes to the taxation system. The Coalition’s proposal to address the competition laws and unfair contract provisions in dealings with large firms are key points of difference.

Over the past year I have written a number of articles and columns in The Conversation about small business and the issues that affect them. As the election campaign rolls on towards the proposed election date, I would urge both sides of politics to consider the following.

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