When I think about small businesses I often think about the more than 4.5 million people employed by the more than 2 million small businesses that operate in this country, and the fact that those small businesses really deliver for our economy, more than $340 billion each and every year. They are the corner shop where you buy your milk or purchase your Saturday paper; the accountants who prepare our taxes; the restaurants where we have great celebrations; and that is just the tip of the iceberg. They are the touchstone of our economy and of our community and we celebrate small business.
Small businesses not only set about providing income for their families, not only engage in their communities, but they have great ideas and the great visions that can change our country and in some cases can conquer the world.
Like all of you, I want to see small business succeed and I want small business to be as strong as it can be. We see our role in Government not just in creating the right business conditions and removing barriers so that anyone who has the courage to take a risk can see it through can create a thriving small business, but we also see our role as directly advocating on behalf of small business as well.
I have taken on the mantel of Small Business Minister from someone who has been a wonderful champion and friend to small business in Bruce Billson. I want to acknowledge tonight that Bruce has made a very public announcement that he will, after 20 years in the Parliament not be seeking another term. I really want to pay tribute to the job that he did as Small Business Minister and I know that he very much appreciated the engagement that he had with COSBOA. I know that with him and from him I take up a very strong relationship with COSBOA. We have had though in just a matter of weeks our foot firmly to the pedal in support of small business. I just want to run through a couple of key things.
Protection against unfair contracts
The Government has now passed legislation extending consumer unfair contract term provisions to small businesses. I know this has been at the heart of what you have been advocating for some time. With small businesses often facing the same vulnerabilities as consumers, we recognise this now in legislation. They are often provided with contracts on a ‘take it or leave it’ basis.
This change will cover standard form contracts where at least one of the parties employs less than 20 people, and where the upfront price of the contract does not exceed $300,000 or $1 million for contracts longer than 12 months.
As many of you have said to me in response to this, it will see more than 2 million small businesses have more time and more resources to invest in their business’ success, rather than navigating what can be a confusing maze of contract terms. We see that to be a step forward.
The innovation agenda
In the last couple of months the Government has been talking a lot about our innovation agenda – and we will have a package to be released in just a matter of weeks. I look forward to being able to talk to you in a bit more detail about that.
One of the keys to growing and strong productive competitive economy is innovation. We believe innovation and science must drive industry growth, business productivity and our global competitiveness. We are living through the digital revolution. Each new idea or innovation has the potential to transform our way of life. We want Australians to lead on that transformation agenda, not to play catch up.
This touches small business particularly closely because every brand new business starts small. We want start-ups and entrepreneurs to have a clear path and a clear view of the rewards when they set out. We want small business to have the agility and access to finance they need to start or to evolve or to grow.
Employee share schemes
That is why we have made key changes to employee share schemes, which can potentially support innovative start-ups by helping them attract and retain skilled employees. We are giving those employees a real stake in the business and an incentive for high performance.
We know, just as you know, that human talent makes small businesses succeed, and we have made it easier to set up an employee share scheme, and easier and cheaper for employers to run one. The ATO has released standard documentation and ‘safe harbour’ methods to simplify the process and reduce the time and costs involved.
These changes make Australia a more competitive place to do business, particularly for young and innovative firms looking to invest and grow. We want to make Australia even better for people looking to start-up, to have an innovative, entrepreneurial spirit, and to invest that in their business through their talented people and allow them all to benefit from the success of their business as it grows.
These changes, which came into effect on 1 July, have been well received and have made Australia’s taxation of employee share schemes highly competitive internationally. We are in a global war for talent and we need to make sure we can attract and retain that global talent.
Crowd-sourced equity funding
We know that some small businesses have difficulty accessing finance. We need to look at innovative ways we can provide access to finance. We are progressing reforms in innovative funding sources like crowd-sourced equity funding (CSEF). We are currently finalising legislation which we are going to bring before the Parliament before the end of the year to usher in one of the world’s best practice CSEF regimes in Australia. We know that some firms like Equitise have already indicated they intend to start operating here once the legislative framework is in place.
Founder of Equitise, Chris Gilbert, has said that the new framework “will provide many great Australian businesses with the opportunity to access large pools of capital from a variety of local and strategic investors that they don’t currently have access to. It will mean Australian companies no longer have to reach out to the overseas markets to fund their innovative local businesses.”1
That is what we want – we want diversity of ways to access finance. Harper: Competition Policy Review
Many of you tonight will have heard the announcement by the Treasurer today in relation to the Government’s response to the Harper Inquiry. We want to have a really competitive environment in Australia and we know that those people at the sharp end of competition are small businesses.
Today the Government responded to that Review conducted by Professor Ian Harper and announced that we are increasing choice and delivery of better services central to the Government’s key focus to driving growth and jobs in our economy, and our response makes this clear.
Small business directly benefits from a number of recommendations, including in access to remedies, improving the collective bargaining regime under the competition law, encouraging governments to review their competitive neutrality guidelines, and reviewing the anti-competitive impacts of regulations, such as standards and licensing.
There was one element that I know that many of you are also very interested in and that is Section 46. The Government does acknowledge the concerns, the very real concerns, that have been raised around the operation of the misuse of market power provisions in the Competition and Consumer Act and the need to ensure that these provisions enhance rather than inhibit competition.
We note the Harper Review recommended some change here and I want to let you know that the Government recognises that some change is necessary. We want, though, to get that change right. The way that we will get that change right is by bringing everybody around the table and I have been in discussions with Peter Strong, who is one of your most powerful advocates here, in getting together stakeholder consultation groups with a very clear timeline that we will have this settled by March of next year.
I want to encourage you to engage in that process. The new Treasurer and I are very clear that we want this to be a very open process where everybody can put their cards on the table, and we recognise that there does need to be change and that we want people to come from their corners to be able to actually have that genuine discussion around that change. We will be leading that process and I look forward to working with Peter and many of you in making sure that we can find a resolution to that. Small business and jobs package
In addition to protection against unfair contracts, new sources of finance, and competition reform, I also want to talk about our 2015 Budget’s $5.5 billion Growing Jobs and Small Business package – the biggest small business initiative in the nation’s history.
It was a Budget that celebrated small business, recognised small business, and made sure that we set up small business in the next steps in their success.
Tax cuts for small companies and a tax discount for unincorporated small business, combined with our immediate tax deduction for assets under $20,000 gave small businesses the resources and the confidence to invest in themselves.
In Carnegie, Victoria, a young financial services small business was producing marketing materials to attract new customers to grow the business. Every couple of weeks they would have a staff member design the materials, take the design down to a large-chain office supplies store to place a printing order, return to check the printer’s proof, return again to collect the printing, to then send it out – all of which occurred over a matter of days. But with the $20,000 instant asset write off opportunity this business invested in a high quality printer – something they had planned to do at a later point, but now had the ability to do earlier. This meant that that staff member simply designed the materials one afternoon, set the printer to run overnight, and then sent out the material the next morning.
Instead of what was a multiple day endeavour this small business is now turning marketing materials around much faster, enabling them to contact more customers more easily. And that staff member that had previously had to leave the office multiple times to check printing and pick up printing has more time in the office dedicated to better tasks servicing customers or growing the business.
With the instant asset write off available to businesses up to the end of June 2017 there are still many opportunities for small businesses to invest in assets under $20,000.
Trade opportunities
Of course, there are also great opportunities for Australian small businesses offshore. The historic agreements we secured with China, Korea and Japan – our major north Asian trading partners – are already bearing fruit.
Howard Dray manages the Old Colonial Cookie Company. They have been exporting to China for 10 years, but Mr Dray expects that his exports to China will double in the next 12 months alone as a direct result of the free trade agreement and the fall in the Australian dollar.2
Over the next four years, tariffs on biscuits will come down by 15 to 20 per cent, giving their biscuits a distinct advantage in the Chinese market.
We are also very conscious that we need to provide a very good bridge for small business to be able to access these new markets. It’s not just for the export of products, but it’s also for those people who are delivering services or might also be looking to train people, whether it’s in the aged care sector or the education sector. The opportunities are endless, the market is very significant and we now have an advantage.
Concluding remarks
I want to conclude by saying to you that the Government is very keen to make sure that we put in place the right economic settings to grow small business and expand small business, because small business employs so many Australians – more than 4.5 million Australians – and we want you to be able to take advantage of all the opportunities that are on our doorstop.
We know that we have a great partner in COSBOA, we know that we have a great partner in all of you.
We are really excited about the opportunities out there for small business.
Thank you.
1. Equitise: The future for equity crowdfunding SMEs in Australia, by Fi Bendall
2. The case study company emphasised that the increase in exports was a result of both factors.