The Government is ignoring small businesses at its peril
Latest research shows the business health of thousands of SMEs has drifted into the critical zone. This has happened when it’s obvious the future of Australia’s economy depends significantly on SMEs’ ability to grow, also at a time when the government, despite a pre-election promise to have small businesses on its radar, apparently hasn’t.
Indeed, Macks Advisory notes seething resentment in the small business community at the Federal Government’s disinclination to help them fulfil their universally acknowledged central role in growing Australia’s economy.
“We cannot achieve the future we desire when six out of seven Australian companies have fewer than five employees. We must do better – and that requires us to change what we have been doing, because what got us here won’t get us there”. So says Dr Dana Matthews who is the ANZ Chair in Business Growth, professor and founding director of the Australian Centre for Business Growth at UNISA Business.
And according to former chief executive of the Council of Small Business Organisations Australia, Peter Strong: “We need to make sure that economic health is driven from the bottom up, not from big decisions made in central agencies on our behalf. Ownership of change shouldn’t rest with a handful of boffins at Treasury – that doesn’t work.”
He says indicative of the government’s disappointing attitude to SMEs was a recent parliamentary question time when government backbenchers were permitted to breach protocol and disrespect the nation’s 2.1m small business owners and their 4.5m employees.
Members were allowed to refer to the “Minister for Housing and Homelessness -- excluding “and Small Business” which is the rest of the portfolio’s correct title.
Mr Strong has stated publicly that the slight, if deliberate, could have derived from government belief “very few people in the small business community are union members, and they don’t count. No one is championing the needs of small business in the federal parliament”
The rationale for more government support
For decades the Australian economy has depended too much on a few companies able to dig up a wealth of natural resources and sell them globally.
But there has been a resulting failure to develop a broad spectrum of innovative companies of all sizes across multiple industries, and consequently the Australian economy lacks complexity expected in a highly developed country,
This has tended to put us in some respects at the mercy of a small number of international customers while having problems getting domestic companies to grow.
In the US 13% of companies are medium sized (20-199 employees) and 1.5% are large (200 or more employees). In Australia only 2% of companies are medium sized and just a fraction of a percent (0.2%) are large.
And recent analysis indicates that Australia’s medium sized companies are 10 times more likely than American counterparts to revert to small companies rather than grow into large ones.
Australian Bureau of Statistics (ABS) data reveals 98% of Australian companies have fewer than 20 employees and most owners of these businesses use them to support a preferred lifestyle or to consolidate a legacy for their children.
Very few SME owners know how to grow a company with increasing revenue profit and jobs, to a stage when it can go global.
Macks Advisory has become aware that among Australia’s small business community there is an increasingly strident demand for a national program of economic development that delivers true empowerment to local business communities for the national good.
The worth of values-based capitalism
A predominance of Australia’s small businesses would flourish in such a program because of their appreciation of the worth of values-based capitalism.
They have long understood success of businesses depends very much on reputations of owners, on customers’ and a community’s acknowledgement of honest, hard work that creates local jobs.
Small business owners are finding it hard to understand why the government is disregarding – perhaps deliberately ignoring – the contribution they can make to desperately needed skills development, their flexibility that enables management of change, their capacity for employing disadvantaged groups of people, and how much they can also benefit the economy in health and recreation sectors.
They are saying the last time the Australian economy faced an economic challenge comparable to the present one was in the Hawke-Keating era.
Treasury mandarins, politicians favouring “big government”, and blinkered ideologues weren’t allowed then to stall a program that worked well for small business and could work comparably for what’s needed now.
The possible political fallout
Criticism of “L plate Treasurer Jim Chalmers” who advocated a high-taxing interventionist agenda in 2019 that he revoked in the election last year but now seems to be rejuvenating, is rife in the media, where it’s said his recent essay aligning himself with Keating lacks core beliefs and conviction.
Commentators point out that a politics doctorate and lofty plans to change the face of Australian capitalism in treatise form were not for Keating.
He left school early, was politically active in his teens, won a union position, entered parliament at 25, and was wise and practically minded enough to learn how politics and the economy worked from the ground up.
High profile political commentator Chris Kenny wrote recently: “The Keating experience tells us the media and the electorate are two powerful domains which must be carefully nurtured, for both are willing and able to turn on a Prime Minister, with dire consequences.”
Peter Strong, mentioned earlier, makes no bones about this: “The PM promised a lot to small business before the last election, but not so much is happening. Politicians’ memories may be short but, be assured, small businesspeople will remember who supported them when it comes to the next federal election”.
