The Federal Treasury’s Annual Report 2023-24 includes measures for small business, but there is more work to do to better support the sector.
At a glance
- The Treasury’s annual report revealed economic growth, a resilient labour market, stable unemployment and nominal wages growth.
- Improving payment times reporting and supporting the Australian Small Business and Family Enterprise Ombudsman are two ways that Treasury has helped small businesses during the past financial year.
- Advocates say the Treasury needs to better consider the specific needs of Australia’s small businesses.
There are not many mentions of small business in Treasury’s Annual Report 2023-2024, published in October and herein lies a problem, say advocates.
They say the federal government’s lead economic adviser isn’t doing enough for the 2.5 million small and family businesses in Australia, which employ more than five million people and are currently facing significant challenges.
The 2024 Small Business Conditions Survey, published in July, found nearly half (45 per cent) of small business owners have considered closing or leaving in the past year, with 82 per cent struggling with red tape and 40 per cent expecting reduced profits.
Despite challenging economic conditions, the Treasury’s report presents an optimistic outlook, highlighting economic growth of 1.5 per cent in 2023-24, a resilient labour market and nominal wages growing at nearly their fastest rate in 15 years.
However, previous Treasury modelling has downgraded annual productivity growth from 1.5 per cent to 1.2 per cent per annum over the next 40 years, which leaves small business particularly vulnerable.
Small advocates say they were not given the focus they deserved in the report.
“We need to see small business front and centre in Treasury’s thinking to boost productivity, promote competition and sustain growth into the future,” says CEO of COSBOA Luke Achterstraat.
Anne Nalder, founder and CEO of the Small Business Association of Australia (SBAA), says while the Treasury’s Annual Report is comprehensive, it “fails to showcase its support for small business”.
“Small business is the engine of an economy yet it is treated as a second-class citizen. Our current taxation and industrial relations laws are made for big business,” she says.
Key highlights in the Treasury’s Annual Report for small businesses include:
1. Improving payment times reporting
In 2023 Treasury supported an independent review of the Franchising Code of Conduct and introduced the government’s first Small Business Statement in May, which suggests targeted support for small businesses.
While not actually mandating or minimising payment times, the statement included the simplification of payment times reporting, a crackdown on non-compliance, and the naming and shaming of big businesses that fail to pay small businesses on time.
Treasury has encouraged the use of the Payment Times Reports Register, which shows small businesses which large businesses pay on time, achieving 84 per cent participation from reporting entities (almost reaching its target of 85 per cent), up from 72 per cent the previous year.
However, while 76 per cent of key stakeholders said information on reporting requirements was accessible, only 49 per cent said this information was clear.
Nalder would have liked the Treasury to have suggested mandated minimum payment times.
“While I prefer using the carrot rather than the stick approach, a serious situation such as obscene late payments to a small business will not work if allowed to be voluntary,” she says.
2. Supporting the Small Business and Family Enterprise Ombudsman
In 2023-24, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), which reports to the Treasury, responded to 6,254 assistance requests, offering contact centre guidance, referrals, personalised case management, mental health support, and tools for business growth and decision-making.
Key figures from the ASBFEO in 2023-24:
- Assisted in 1,396 disputes involving small and family businesses.
- 26 per cent of disputes were with digital platforms or digital service providers.
- Most common disputes were payment disputes (42 per cent), contract disputes (20 per cent), and Franchising Code of Conduct concerns (9 per cent).
- Finalised 1,479 cases, resolving 87 per cent of all received cases.
3. Further initiatives
The Treasury is working on the federal government’s National Competition Policy reform to boost competition, particularly in digital services. It includes managing digital platforms and preparing for projects like the Consumer Data Right and Digital ID.
The Treasury also supported an independent review of the Food and Grocery Code of Conduct, targeting unfair supermarket practices affecting small suppliers. The review suggested mandatory compliance for supermarkets with over $5 billion in annual revenue and introduced penalties and complaint mechanisms, which the government has accepted.
Greater focus on small business needed
COSBOA welcomes Treasury’s efforts on payment times reporting, competition policy, the Food and Grocery Code of Conduct and its stated support for the Australian Small Business Ombudsman but believes it can do more.
“As the key economic agency, Treasury must ensure bad policies and increased red tape are not hoisted onto small businesses,” Achterstraat says. “This includes speaking up during the policy coordination process on issues such as industrial relations, the Privacy Act and environment reporting where regulatory costs are likely to hurt small businesses, productivity and the economy”.
Nalder says small businesses have “serious structural issues that governments fail to understand and rectify” and require greater attention from the top.
“One must go to the root of the problem … policy in this country that is in most cases it is one-cap-fits-all regardless of the sizes and needs of micro-, small- and medium-sized firms.”
Some of the Treasury’s stakeholders may agree.
When rating Treasury performance across 14 policy areas – from legislation development to international economic policy and tax – the lowest rated policy area in 2024 was small business, dropping to 50 per cent from 70 per cent the previous year.
