Looking beyond the levy

Every smart business needs to look beyond the trivia of the levy/tax debate we don’t need to have and focus upon making the most of the economic recovery and flood reconstruction process.

The reality is that the Gillard moves are a cover for real cuts in Government spending and support for small business job creation, while opening up substantial revenue opportunities for small and medium enterprise supplying the disaster recovery efforts across the nation.

While there will be cries that there should be more cuts in the interests of special pleadings, the reality is that the Government is still on track to manage the return to surplus in three years time, cut faux stimulus measures and face down inflationary pressures caused by the mining boom.

By the next election the risks of rises in labour costs and shortages of skilled workers will be the biggest battle for smart companies.

As the post-Henry Treasury prepares for the battle over ‘great big new taxes’ from Tony Abbott and demands for a long-term insurance and emergency fund along the lines of New Zealand’s earthquake funds from the independent rural socialists, small business will face the real problem of gaining capital for growth.

Australia’s small business organisations will need to continue the call for access to and renegotiation of affordable finance as the big four banks continue to place their profit margins ahead of national development. The nation needs to see a new financial player that emerges from a combination of financial institutions willing to lend to small business rather than to the housing sector.

The next three years will see a substantial increase in the cost of commodities and a rise in the demand for professional services but real pressure from the lenders for solid forecasts of forward orders and/or emerging market expansion. Importing skilled labour is a short-term solution that can be justified by infrastructure restoration and investment but is not a substitute for investment in domestic research and development and higher education.

Profitability and longer-term sustainable growth will be determined by the ability of many small businesses to access affordable finance and the extent of substitution of technology for labour in the next three years. The Productivity Commission needs to have a special reference to the requirements for longer-term growth of sole traders and micro enterprises that could offer prospects for innovation, creativity and entrepreneurship.

As indicated in earlier columns, now is the time to invite your business lenders to get off their business couch and come and see what you are doing to generate new business and retain high quality sales staff. Now is the time to offer beleaguered bank managers a free lunch and the chance to learn the realities of small business growth. Without the capacity to raise equity in the marketplace, small businesses will have to rely on finance provided by family and associates withdrawing from gold and bond inflation hedges for working capital and capital expansion.

In a time of near full employment it is time for small business owners to pressure all State Governments to agree to support SME development and cut payroll taxes, while the Gillard Government needs to be encouraged to guarantee substantial cuts to corporate taxes for companies that are taking on skills training and apprentices.

Disasters offer evidence that the community is prepared to take on greater personal responsibility, but the lessons from the past are that if we fail to plan ahead we will be coping with the next financial crisis without the capacity to cope with the next double dip crisis that is already emerging. Managing the post mining boom economy is less about a super profits tax and more about encouraging small business to provide the skilled workforce that we will need in the next decade.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which 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. Colin is also a member of the global Association of Professional Futurists.

Email dr.colinbenjamin@marshallplace.com.au
Phone +61 3 9640 0099