Small business disaster assistance needed in the national interest
As the new year ushers in an era of widely acknowledged scary uncertainty worsened by predicted climate-change and cyber-space disasters, Macks Advisory’s resources reveal what can and should be done by federal and state governments to support small businesses.
In doing this governments will not only preserve political capital but help the resilient small business sector fulfil its traditional role as the cornerstone of the nation’s economic sustainability.
Insolvency rates last year crept up to 2019 levels as government pandemic assistance programs were terminated, and years of extraordinary tax office leniency began to be replaced by its debt recovery campaign.
CPA Australia expects this rate to increase in 2023 because members who are insolvency practitioners report heightening levels of enquiries.
It’s also becoming increasingly obvious that governments’ procrastination in devising and providing disaster support for small businesses is not only risking avoidable damage to the economy but also loss of valuable political capital. Already it’s clear thousands of electors are not taking kindly to this procrastination.
Here’s where help is needed
Casting a wide net and talking to as many clued up business contacts as possible in available time, we have determined the following four areas where governments’ assistance is most needed, could be most effective, and would yield most bang-for-buck value.
The first, is with cybersecurity which has been a major concern in 2022.
Reports of devastating cyberattacks on Medibank and Optus have dominated news headlines for weeks. Bad for big business, data theft has been much worse for small businesses that lack extensive technological resources that can at least provide some measure of protection against a whole range of negative digital shenanigans.
Small businesses not only need help in fending off attacks from cyber space but also to increase digital capability. CPA Australia’s annual Asia-Pacific small Business Survey reveals that Australian small businesses are lagging in digital uptake – both in skills and technology – that can enable them to be as productive and profitable as they should be in a tech-focused world.
True, the federal government is offering a temporary Technology Investment Boost till June this year, but clearly countless small business owners understand neither the technology nor how to apply it to their operations, and therefore need education that could be to governments’ advantage to organise.
And surely state governments could be considering introducing programs that encourage investment in selected technologies that complement the federal scheme.
Formalised disaster support
Australia has been bedevilled by storms and flooding in 2022 – including disasters that were in the news as this month’s newsletter was being written. Furthermore, disastrous weather events triggered by climate change are predicted to increase in frequency in 2023.
We’ve seen thousands of businesses struggling in current disasters, and while governments and volunteers in their thousands have willingly provided help, it’s obvious this would have been more effective had they been working to an existing standardised disaster support plan.
Lack of pre-planned procedures for supporting businesses in the event of catastrophic floods, fires, droughts or other disasters, means there will be inevitable and costly delays delivering support that could make all the difference between a business’s survival and terminal loss.
Innumerable examples of how businesses have struggled in recent years to handle one unforeseen crisis after another provide a powerful incentive for governments to have ready and to publicise widely, details of available specific standardised and scalable small business support packages that can be deployed swiftly.
Establishment of such packages, education programs about precisely what they’re set up to achieve and how they can be accessed, is our second suggested government focus for small business disaster relief.
“Expensing” issues and advice incentives
The federal government has a temporary so-called “expensing” scheme that experience seems to indicate could and perhaps should be made permanent for small businesses, as a third pillar of disaster support.
As it is, the scheme provides temporary full expensing for an instant asset write-off, and clearly has helped many a small company invest subsequently in assets that have made them stronger in the aftermath of disasters than they were previously.
This scheme has also proved to be an initiative that’s made tax depreciation issues less complex.
However, there seems to be a mounting level of opinion among small business owners that the existing temporary expensing scheme, if made a permanent fixture in disaster support for appropriate small businesses, would encourage increases in capital investment that would benefit the economy generally.
We suggest government education campaigns that incentivise business operators to seek advice that will put them on the front foot for post-disaster recovery and expansion, should be considered as a fourth way of providing formalised disaster support for small businesses.
Government programs funding small business owners who need to seek advice from trusted advisers are establishing a record of success. The Victorian Small Business Specialist Advice Pathways Program with funding of $5m and launched last year, was fully subscribed within 72 hours.
Some conclusions
Experiences of small business owners, the bureaucracy, and the public generally over the past couple of years have highlighted the pressing need to establish as an economic imperative, formalised and permanently-ready-for-rollout disaster relief packages.
Their functions and means of access should be widely publicised, and small business owners incentivised to take informed advice about what packages/programs could be most usefully applied to their particular business during the next entirely possible, if not likely disaster to come their way.
