Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.
Radio 2CC Canberra
Subject: 14 Steps to energise enterprise to boost small and family businesses
Leon Delaney
The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, has expressed his concerns that Australia may be sleepwalking into a big corporate economy at the expense of the viability of small and family enterprise businesses. Bruce, thanks for joining us today.
Bruce Billson
Leon, great to be with you and your listeners.
Leon Delaney
Why are we sleepwalking into a big corporate economy?
Bruce Billson
Well, the trajectory of the economy points to that as being the path we’re on. And I’m trying to call that out to say, well, let’s think about whether this is what we desire or not. I’m a great believer in small business being the engine room of the Australian economy, a great generator of innovation, wealth, employment, opportunity and prosperity. But essentially, according to the research we’ve done, if that engine is a four-cylinder engine, we’ve lost a cylinder.
And we’re also looking at a growth in the proportion of the economy that the big corporates control, a reduction for small business in the contribution to GDP. It’s about a third of all economic activity in the economy now. It used to be a bit over 40% just in 2006. And even in employment terms, right now, two in every five private sector jobs is made possible by a small or family business employer. That’s great, that’s worth celebrating. But that used to be half of all private sector jobs were made possible.
So, I’m just calling that out, saying, if we want a future made in Australia, we need enterprises made in Australia, and that means really energising enterprise, supporting small and family businesses, and encouraging more people to think about their own business as a path for their livelihood.
Leon Delaney
Now this week we’ve seen insolvency figures and Insolvency Australia yesterday, in the statement they made, were referring to chaos and turbulence continuing. I mean, that’s pretty powerful language, isn’t it?
Bruce Billson
Well, it is, and we are at record highs in terms of numbers of insolvency, but worth bearing in mind, in terms of a proportion of all operating businesses, we’re not at that all time high. We’re about a bit over 0.3% at the moment. About 0.5% was the high-water mark. So, my concern is there’s still more to come, I would imagine. And we know the Tax Office is up and about really working hard and sharpening its effort on pursuing outstanding Superannuation Guarantee contributions or tax debts more generally. We also learned from the last full year of tax data that’s available, 46% of small businesses weren’t profitable. And of the 1.5 million Australians that are self-employed, independent contractors, for whom that livelihood is their full-time endeavour, three-quarters are taking home less than average weekly wages. So, there’s no rivers of gold here.
And we know, and you’ve talked about it a lot with your audience, about cost-of-living pressures. Well, they’re cost-of-business pressures for small and family business, and they’re hurting. They are impacting on customer spending, and we know there’s no business success without customers.
Leon Delaney
There’s a lot of pressure on the economy at the moment, it’s pretty much flatlining. All of the data tells us that the economy is very fragile right now and is at imminent risk of being pushed into recession if some miracle doesn’t occur. It’s clear that the operating conditions for businesses big and small have been very challenging. But the more challenging the conditions, the more difficult it becomes, particularly for smaller businesses, because the bigger companies have a certain degree of protection from their sheer size, don’t they?
Bruce Billson
That’s right and scale and market dominance brings its own bumper rails. It’s something that, you know, we can talk about this another time, but we’ve gone through COVID, the research points to larger businesses tending to recover better after times of great turbulence, because they’ve got deeper balance sheets, they’ve got scale, they’ve got funding options. They’ve got avenues of support.
You might lose a bit of value in your share market price. For small business they might lose their home, Leon. So, these are really substantial challenges. We know that half of all small business lending is secured by a private home. We also know the average age of a small business owner is now 50. So there’s an aging profile there, and we’re not generating enough excitement and appetite amongst young people and midlife people to think about their own business as an option.
It still brings many delights, and that’s why so many people still seek their own and guide their own business. But we need to make sure that the ecosystem within which they operate is as supportive as it can be, so that they can be successful, and that’s why I’ve released these 14 steps to energise enterprise.
Leon, these are practical, actionable information that I’m inviting our leaders, our policy makers, our decision makers, to pick up and do something with so that we can improve. Maybe reduce the headwinds that are in the face of small and family business owners and put a bit of wind in their sails.
Leon Delaney
Now, I’m sure we’re not going to be able to reel off a list of 14 steps, but …
Bruce Billson
Go on. Of course we can, Leon. That’ll be gripping listening for your audience.
Leon Delaney
One-minute and 47 seconds left, Bruce. What are the key proposals?
Bruce Billson
Well, there’s a couple of things. One is we think the regulatory burden in its scale and its complexity is increasing and the difficult economic climate sees the risks maybe growing, whereas the rewards aren’t.
And we think that balance needs to be adjusted, put some incentives back into it by having a tax offset or a discount, for those early years of a new business where it’s the valley of death of cash flow. Having a real, passionate, commitment to right size regulation and not overwhelming small and family businesses with compliance tasks.
But a big one for me is let’s have every Cabinet submission, every major decision by governments, include a small business impact statement so that those concerns are front of mind, bright on the radar screen.
They’re just some of them. There’s a number of more of them. I’d invite your audience that’s interested to jump on our website, asbfeo.gov.au they’re out there in the public domain. I’m inviting anybody who’s as concerned about it as I am to embrace these ideas and do something about it.
Leon Delaney
Number 9 – ban unfair trading/business practices that distort competition and harm small business. Anything that’s unfair and distorting competition, surely that’s already outside the rules, isn’t it?
Bruce Billson
No, it’s not. We’ve got a huge gap in our competition laws, quite different from economies that are like ours. In our laws, you might have an unfair contract term. So, that’s the ink on a contract might be unfair. And then the next area where unfairness plays out is unconscionable conduct, and there’s a very high bar. In between it is a lot of overly sharp business practices where businesses are weaponising their strong market position to cause harm, not only to small businesses, but potentially customers.
These are like renewals of subscriptions, where you’ve got to be at 4:27, on a glorious Canberra day, and have a left-handed person say you don’t want to renew in the next 30 seconds, otherwise it’s deemed to roll over for another 12 months. I mean, those sorts of things are ridiculous, just as it is when you’re dealing with some of the major corporates and they’re saying, here’s the price we’ll accept, and the small business has got no choice. They’ve invested, they’ve got no other customers, they’re dependent on those firms. And sometimes that behaviour is beyond shabby, and we’ve got a big gap in our law, in how we deal with it.
Leon Delaney
Bruce, thanks for your time today.
Bruce Billson
Good to be with you. Leon.
