Support should be stronger to help sustain small business

Written on the 23 November 2008

THE GOVERNMENT support package for small business revealed at the Small Business Summit in Brisbane will not provide real impact according to John O’Brien Chairman of the Franchise Council of Australia and CEO of Australia’s largest pool and spa care network PoolWerx.

“Small business in Australia employs 60 percent of the workforce but minor measures such as the individual tax management plans, $4 million for advisory centres and guarantees of on-time payments for businesses that deal with government departments are not enough to assist small business in this tough economic period,” Mr O’Brien said.

“For instance, there is only a small percentage of small business benefiting from government contracts and Mr Rudd revealed at the summit the Government already generally pay within 30 days so offering interest on overdue accounts is a soft solution and one they will rarely have to deliver on.

“The red tape, insurance and quality assurance measures that a business needs to meet to qualify as a government supplier is also prohibitive for many small businesses. Perhaps if this was reviewed and simplified more small business could benefit from the $30 billion the government spends on goods and services.”

Mr O’Brien who said the franchising sector comprised a third of small business in Australia, posed a number of new measures he believed would directly assist small business in the face of a downturn.

“The engine room of the economy is not getting any preferential treatment and as a representative of the franchising industry, one of the biggest contributors to employment and small business in Australia, I feel it is my duty to rally more support.

“The government has committed considerable resources to ensure consumers can borrow more easily and receive the full benefits of rate cuts but the same diligence has not been paid to business owners. The Government should be pushing the finance industry to pass on the full rate savings to business loans.

“Most small business has a percentage of debt facilitating their activity which generally lies with non-bank lenders and the uncertainly in this market calls for the Government to also rally the major financial institutions to be more receptive and accommodating of small business loans.”

Mr O’Brien said the tax measures announced were not wide spread.

“In my opinion small business has become the tax collector for the government through GST and payroll tax. A solid and truly beneficial measure would be to reduce tax levels particularly payroll tax. The thresholds should be increased and rates lowered further.

“Just in my business if this was able to be achieved we would be able to afford to hire up to two more people just at head office. Small business is the conduit for achieving steady employment rates and you can image the effect is such a measure was implemented.”

Relaxing immigration requirements would also enable business growth according to Mr O’Brien.

“Small business thrives through immigration which is particularly evident in the franchising sector. It drives employment, improves competition and encourages demand.  For example the average age of our franchisees is 50 but many visa requirements state a person must be under 45.

“The asset requirement can also be prohibitive to entry to the country but is no reflection on the potential of the candidate to run a successful business here.

“It is simply about looking at changes that can be made to boost the growth of small business.

“Small business commends the Governement for taking time to listen to the needs of this sector but it now needs to deliver real solutions that will improve the operating environment.

“All small business really wants from government is for them to get out of our pockets and get out of our way. Let us do what we do best - support and bolster the Australian economy.”