Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Julie-anne Sprague.
Radio 6PR Perth
Subject: 14 Steps to energise enterprise
Julie-anne Sprague
There is a worrying trend and the Small Business and Family Enterprise Ombudsman, Bruce Billson, is sounding the alarm. He’s concerned we are sleepwalking into a big corporate economy. Joining me to find out why and how. Bruce Billson himself, Bruce G’day.
Bruce Billson
Jules, fab to be with you and your listeners and how come Rush, rush from Paula Abdul is not on that list?
Julie-anne Sprague
That’s so good Bruce. We might do a best of three theme with songs that have the word twice in the title, and then we can get Paula Abdul.
Bruce Billson
I think you’re onto something there, but what we’re not onto is great times for small and family businesses. There’s plenty of headwinds there right now, and I’m just trying to draw attention to just how challenging the circumstances are. But also some of the underlying trends and trajectory, which is why I’m concerned with sleepwalking into a big corporate economy.
Julie-anne Sprague
Let’s talk about that. If people think about Australia and business, obviously big business operates, but a lot of people will think there’s a lot of small businesses, a lot of family businesses, but that is starting to dwindle. Let’s talk about how much it has changed over the decade. So, they represent around 33 per cent of the nation’s GDP, Gross Domestic Product. But not so long ago, it represented an awful lot more.
Bruce Billson
Yeah, that’s right. So, $1 in $3 generated in the economy we can thank a small business for, and that’s worth celebrating. That’s very important. That is a big deal. It’s over half a trillion dollars. So yes, that is big, but it used to be 40 cents in the dollar, not 33, not so long ago in 2006. Even what livelihoods are powered by that economic contribution. We celebrate, as we should, two in every five private sector jobs being made possible by a small business. But that was over half in that same window back in 2006. I’m sort of just saying, look, this is a trajectory that’s on. It concerns me because I see other things happening as well.
In the last full year of tax returns, 46 per cent of small businesses not making a profit. I see an aging small business owning community. The average age is now 50, was 45 back in 2006. But also, for young people. I mean there’s only 8 per cent of business owners that are under the age of 30, whereas in the ’70s, it was twice that.
So, something’s going on and I’m just calling it out to say, hey, for people that aren’t blessed with a big mine or a major employer in their community, the livelihoods that are made possible, we should be thanking small family and farming businesses for, and what can we do to best give them the best chance to be successful?
Julie-anne Sprague
A couple of points there you raise Bruce. If you’re saying 46 per cent of small businesses did not make a profit, that says, to me, it’s very, very difficult. And if you’re a young person, honestly, why would you want to go and set it up if you’re seeing that from a generation in front of you? So, what do we need to do as a country to make it at least an easier environment, so that they are able to be at least profitable?
Bruce Billson
We think we need to energise enterprise. We need to not just try, as we’ve been putting a lot of effort into, reducing new headwinds in the face of small businesspeople. What about putting some wind in their sails? What about celebrating that contribution we just spoke about? What about some incentives for people, particularly in those early years, when starting out a business is a very cash hungry thing to do. You might look like you’re profitable on paper, but you’ve got money going out the door building up your capacity to deliver what you hope to deliver to your customers. So that’s a real valley of death in terms of cash flow. We can do things in that space.
I think we also need to be more active in thinking about the regulatory impositions. It’s a big responsibility owning and running your own business. We want to make sure we’re not making it so onerous that it’s incredibly unattractive. And this is when we’re thinking about new rules, new regulations, new compliance obligations. What’s the right-sized answer, not what some big corporation could deal with where they got 20 people tucked away in a compliance area that gets out of bed every day doing that stuff. This is about the business of running the business and most enterprising men and women, that’s not their jam. They didn’t get into the business to lodge BAS returns. They got into the business because of some driving passion, some desire to delight their customers, some real area of great interest to them.
There’s some of the things that we’ve outlined. In fact, we’ve outlined 14 steps that we think will help, and that’s just some of them that we feel would really make the ecosystem as supportive as it can be.
Julie-anne Sprague
And the industrial relations system would feed into that if I’m thinking about regulation. So, there’s your BAS statement. There’s all the paperwork that goes with running a business, and it does feel to me, having a chat to business operators, that the burden has increased over time, and we need to look at that. But then you have an industrial relations system where you’ve got hard-working people, and I think by and by most of them want to do the right thing by their staff, but you have a system where the award rates are incredibly complicated. I feel like you need a university degree just to understand some basic awards. Do we need to simplify things Bruce?
Bruce Billson
We think we do. We’ve called that out as a particular challenge point for smaller employers. I mean, about 94 per cent of all the businesses that employ people are small businesses. But does anyone imagine that the workplace relations regime is actually built for them? It’s not. It’s built for big corporations, at the club of Industrial Relations lawyers, big unions, and they can navigate and play in that playground that they’re familiar with.
If you and I, as enterprising men and women, want to build a business, we could possibly build a $10 million business, employ dozens of people, but still never be quite sure whether we’ve got the workplace relations arrangements right. Because we’ve seen some of the biggest, most sophisticated organisations in the country find themselves having made errors. And when we start talking about big consequences for getting compliance obligations wrong, that has a real chilling effect on people. They think, I’m not sure I’ve got this right, but gee, if I get it wrong, what’s going to come down on me? Is it a ton of bricks, or is someone going to come along and help?
So, what we’ve argued for is let’s have a dedicated Small Business Commissioner working within a dedicated Small Business Division at the Fair Work Commission so that the special circumstances of smaller employees is front of mind and what gets them out of bed every day. And if a small employer makes a misstep, that they get alongside that employer to support and help them to do the right thing, not have a real heavy compliance, and boy, are you going to be in strife sort of tone which isn’t going to support adjustment and isn’t going to support a proportionate approach. And we think there’s a real opportunity to improve that aspect of it.
Julie-anne Sprague
And Bruce, just more broadly, Bob Gottliebsen, he wrote a piece for The Australian newspaper, a business commentator, well-respected, and he’s making the point here that if we have a dwindling small business sector or family businesses that aren’t thriving, that this makes the job of the Reserve Bank of Australia quite difficult. And so, the thesis being that it is in fact, small and family businesses that can keep a lid on prices. They are more nimble, they are more tuned to it. And big business can sometimes sit back and flex their muscle and say, well, we’re big businesses, you’re gonna have to pay this price. Has he got a point?
Bruce Billson
Yes, he has, and it’s a ripper piece that Rob’s written about. He’s drawn the connection between some of the things that we’re talking about and some of the recommendations that we’ve put forward as positive action steps and steered it into one of the big challenges that we’re facing right now, and that’s the productivity challenge. I mean, if we can’t be more productive and innovate and find new ways of delighting people, we then have these pressures in the economy. And a wage increase without productivity gains that go alongside it, is inflationary, and you end up having those sorts of challenges without the magic that sees innovation, new ways of doing things, better ways of operating from everything from the corner smash repair or through to someone running a digital tech platform. There’s always better ways to delight the customer. Productivity is not, you know, go and invent Wi-Fi. It’s little steps in the right direction that sees us being able to get more done and delivering more value for the effort and time we put in. And he’s making the point that’s so crucial, so crucial to trying to drive better outcomes for the economy, but also where small businesses are offering choice and innovation, whereas a big business can impose themselves on the economy, on their customers, and you can sometimes be too powerless to do something about it. So, it’s a really good connection of a range of things. Some really big national challenges, with the day-to-day boots on the ground challenge that small and family and farming businesses are facing.
Julie-anne Sprague
There are some challenges indeed Bruce, and chief amongst them, I’ve got a rush, rush to the next story we’ve got.
Bruce Billson
Jules, it was great to be with you and your listeners.
Julie-anne Sprague
Thank you very much Bruce Billson, Small Business and Family Enterprise Ombudsman.
