The other end of town

As the nation heads for the races, the productivity commission pulls up the pokie straps and the central banks worry about the inflation dragon caused by the Chinese stimulus package, isn’t it time to ask what needs to be done to stimulate job creation in small businesses?

At a time when directors from a range of big initial companies such as ABC, AWB and Centro are belatedly being brought into the spotlight of accountability, and Chris Bowen is about to encourage corporate whistleblowers, the reality facing thousands of smart company owners appears to, yet again, be on the back burner.

Today we have BHP Billiton Chairman Don Argus seeking greater funding options for the $80 billion minerals and energy operations, supportive policy settings and greater pressure for labour market flexibility of the big companies, regulatory reforms and encouragement for greater degrees of freedom for foreign investment. There are lots of concerns about the power of state-owned enterprises in China but not a word about the real source of job creation rather than big end wealth creation in this country.

Contrast this with the statement of President Obama this week unveiling plans to refocus spending of the Government’s $700 billion financial bailout away from Wall Street’s big financial institutions and toward small businesses on Main Street that:

“I know that times are tough and I can only imagine what many of you are going through, in terms of keeping things going in the midst of a very tough economic climate, but I guarantee you this: This Administration is going to stand behind small businesses. You are our highest priority because we are confident that when you are succeeding, America succeeds. Over the past decade and a half, America’s small businesses have created 65% of all new jobs in the country.”

Now that we are out of the storm mentality that justified unlimited crisis talk, guarantees to the big banks and a flood of funds for construction and retail industry jobs, it is essential to put the pressure back on to the real issues of well over a million people who are still unemployed or underemployed.

Again compare this to Obama’s statement:

“These entrepreneurial pioneers embody the spirit of possibility, the tireless work ethic, and the simple hope for something better that lies at the heart of the American ideal. And they have always formed the backbone of the American economy; they’re the ones who’ve opened the mom-and-pop stores and started the computer tinkering that has led to some of the biggest innovations and corporations in the world. After all, Hewlett Packard began in a garage. Google began as a research project. And McDonald’s started with just one restaurant.”

The president calls on Capitol Hill to increase the maximum size of loans small businesses can receive. The administration’s plan would also provide infusions of money to small banks at low rates, provided they agree to increase lending to small businesses. Financial institutions, including credit unions and banks, that serve low-income areas would also get help at even lower rates to help small businesses in the hardest-hit rural and urban areas.

Glenn Stevens and Ken Henry need to listen to this message while they are busy considering raising interest rates to “normal” levels that will put more jobs in jeopardy. The ETS will also provide real subsidies to the biggest polluters while threatening the prospects of medium enterprises across the nation who are penalised by payroll taxes if they create too many new jobs in their firms.

Clearly Stevens intends to stick the boot into prospect of business and consumer optimism because, according to Gary Morgan “more than half of Australians, 56% (up 3% – and the highest since July 2007) say ‘now is a good time to buy’ major household items compared to 21% (up 4%) that say ‘now is a bad time to buy’ major household items”.

The reality is that the props are being taken away from the cash-splash, part-time jobs are replacing full-time jobs and there is already a real sign of a decrease in confidence on four of the five components of the consumer confidence rating scale.

What we need is for Rudd to follow the lead of his buddy and establish a Small Business Administration that guarantees that any smart company that is prepared to take on the long-term unemployed, increase training and expand exports gets more than the special treatment plans of Don, Glenn and Ken for the other end of town.

Smart companies may need to follow the lead of their American cousins and start to let the legislators know that taxation and subsidies to the big banks and big bonus mentality needs be turned around to an emphasis on innovation and new enterprise expansion.

Encourage your local Federal Member to hold a small business community forum to listen to the realities that are holding back the real recovery of this country such as payroll tax, red tape and restrictions on lending for business development.

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Dr Colin Benjamin, Entrepreneurship and Strategic Thinking Consultant
Marshall Place Associates offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.

Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099