As the peak body representing small business COSBOA seeks to provide high-level advice to government about issues of concern and opportunities for advancement for small business enterprise in Australia. While this necessitates working in the political arena COSBOA is itself apolitical. Our aim is to provide well-balanced and practical policy guidance which recognises the vital contribution that small businesses make to Australia’s economy.
Among the important issues is the need to explain that while a small business is a complete economic entity – buying, selling, earning revenue, paying its expenses and salaries and generating new wealth – it is nevertheless usually just one person. It is not a small version of a big business and is not resourced in such a way. When governments demand small businesses collect taxes or complete other tasks they are asking the owner to dip into his or her personal/family time, and to do so without recompense.
What are the most pressing concerns for small business operators currently?
The most pressing issue is the continually increasing demand to provide free-tax collection and other services on behalf of the Commonwealth Government. This year we have the introduction of the paymaster role for the paid parental leave scheme and looming additional responsibilities around superannuation. Each of these will add a serious burden in terms of time and administrative cost. They also add substantial risk in that, while the small business owner is expected to comply fully with the complex detail of the relevant legislation, no training is provided. If a mistake is made the business owner is criminally liable.
Already small businesses incur costs of around $175 million each year just to fill out the BAS. This is equal to around 5000 full-time jobs. In what other area does government demand that people work for free? How many public servants turn up to work each day without expecting a pay cheque?
What legislative or other government actions does COSBOA believe are needed to address those concerns?
There is a need to compensate businesses for the services that they deliver to government. Talking about cutting red tape is not enough. Most importantly, the whole concept of risk and compliance needs to be addressed. Just removing some regulation is not an answer.
Regulations need to be set against the level of risk; a one size to cover the highest possible risk may be convenient for bureaucrats but it is not practical nor does it provide economic efficiency for the country.
How can the needs of small business be reconciled with those of big business?
There is a common misunderstanding about a divide between big and small. This is not true; large and small business actually depend on each other and trade well together.
The problem occurs when a large enterprise abuses its market power. The most obvious examples can be found in banking, retail food, shopping centre landlords and some franchisors. It is disappointing that proposed amendments to the Trade Practices/Fair Trading legislation that would have provided some equality and put small businesses on a level footing were removed. This is a major failing of the Australian Government.
How much of a threat is increasing globalisation and the rise of internet shopping for goods and services?
Australia is a small market and generally fails to achieve the economies of scale available to our international competitors so, by definition, our unit production and distribution costs are higher. Add to this the cost of our lifestyle which includes high wages, economic protection for employees, compulsory superannuation, high level OH&S requirements, paid holiday leave, disproportionately expensive bureaucracy and the costs of running any enterprise in Australia are generally greater than many international competitors. These are input costs to business; they have a greater impact on small businesses than larger ones and will multiply up to four times as they move through the sales chain. This is the exact point where the real costs of excessive red tape and compliance and an overzealous bureaucracy come in. These costs can only be provided for by sometimes higher prices. They are not of the suppliers’ making, they don’t represent excessive mark ups but rather are the manifestation of our Australian lifestyle. Australians could possibly buy everything they need over the internet from overseas suppliers but as the money flows out of our country so do the jobs – not just jobs in retail but job losses across the country. COSBOA would like Australia’s citizens “to think local first” and consider the long term ramifications of saving a few dollars today.
This is not to speak against the many benefits that flow from big national and global enterprises but there are also downsides. The most obvious, and often overlooked, is the propensity of such large organisations to shift net wealth out of local communities (and countries) and towards global centres.
Sadly big business and globalisation is not a balanced equation. This has become more obvious in recent times. Many products have become cheaper through globalisation but in simple terms, bigger is not always better.
How has the small business sector come through the global financial crisis?
It is now well recognised that small business became the anchor for Australia during the GFC. Business owners took the cut in ways like: no family holiday, no new delivery van or a dip into the family savings account to keep their business running, while the government-supported banks reduced lines of credit and increased the margins on loan funds – and these margins have still not returned to pre-GFC levels. While major employers often slashed staff numbers in advance of need, small business held onto their key people, though perhaps on reduced hours. This was particularly evident in the regions and small communities where small businesses are the local big business. As recovery commenced we now have a situation where because the resources section of the economy is going well the Reserve Bank Board is acting to penalise the rest of Australia by raising interest rates, and creating fear and uncertainty in the market place. This is proving very damaging to small businesses across Australia. It is disappointing that the policy makers are more interested in theory than the practical reality of the time.
