There has never been a tougher time to be in business.
Prolonged drought, a horror bushfire season and a global pandemic that is far from over – have contributed to the worst economic conditions we have seen since the Great Depression.
Just last week we heard Treasurer Josh Frydenberg forecast a peak unemployment rate of 9.25% in the December quarter. Along with that, came predictions of a record high deficit of $86 billion dollars – that’s projected to balloon to more than $184 billion dollars in 2020/2021.
It’s a mammoth debt to pay back and the only way to do it is to deliver economic growth by getting Australians back into work and increasing productivity.
So where will those jobs come from?
A recent NAB report found SMEs make up 99 per cent of all businesses. They employ two-thirds of all workers and produce half of all output. And 97% of businesses have less than 20 employees.
According to that report – In 2018, 76 per cent of new jobs came from SMEs.
To put it into perspective – if all Australian SMEs hired just one extra person, we would be at full employment.
The challenge for the government is to carve out a system that supports the small business sector to deliver the growth in jobs that is essential to our economic recovery.
But as the saying goes – if nothing changes, everything stays the same. In this case, the system needs to change to give small businesses the confidence they need to hire, grow and prosper – particularly in the midst of this pandemic, which is putting small businesses – many of which were strong and viable just a few months ago – in a world of pain.
Broadly speaking the major expenses for small businesses are rent, wages and loans. The Federal Government has worked to great effect with National Cabinet and the banks to cushion the blow on all of these fronts. Make no mistake, these measures – including everything from JobKeeper to the Mandatory Tenancy Code of Conduct to the six month loan repayment holidays – have made a huge difference. They have been an absolute lifeline for many small businesses.
But now the conversation needs to move on from those survival measures, to how we get these businesses thriving and hiring again and the economy back to full health.
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38% of small businesses are owned and operated by women and that number continues to grow.
Many are mothers who rely on childcare as they work tirelessly to get their business back on its feet.
For those that are living on JobKeeper, they won’t be able to afford the reinstated childcare fees and that could force parents – mothers more often than not – out of their jobs. That’s detrimental to their business and even worse for the economy.
In my view, childcare is an essential service for parents in small business and it needs to be affordable.
Recent ABS labour force data shows women have been among the hardest hit by the pandemic, with the female participation rate falling dramatically.
Right now, the government should be considering innovative ways to increase the female participation rate. This would ensure productivity gains and help owners in their efforts to get their businesses back on track.
There are a number of ways the government can do this, including making childcare tax-effective or by phasing in an expanded subsidy scheme, which the Grattan Institute estimates would deliver an $11 billion dollar economic boost.
Economists have long referred to the double dividend of childcare increasing workforce participation rates and providing early education.
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The key to restarting the economy is to get people back to work and re-building confidence.
It’s easy to talk about this issue with statistics – they certainly exist – but it’s also important to remember that small businesses aren’t just another number.
They are real people, with their own story to tell.
I want to take this opportunity to paint a picture that shows you what a small business really looks like and the daily challenges they face. It’s a good way to show you what needs to change and why.
Let’s start by acknowledging the fact that some of the greatest contributors to the Australian business community are migrants. About a third of small businesses in Australia are migrant owned.
Danilo – was visiting Australia from Brazil on a six month student visa – when he decided his dream was to one day own his own café in Sydney. It took him five years before he had the funds and the confidence to open his cafe. It was more than just a business – it was his life. It was where he met the woman he’s now married to. Their wedding reception was held there. The café was part of the community. Mothers groups gathered there, he would supply coffee to local school fetes and supported local sporting teams and other charity fundraisers. He knew his regular customers by name and their coffee order. Danilo employed 20 staff, mostly casuals and he, like other small business owners – particularly those in hospitality – faced the challenge of navigating Australia’s complex regulatory system. He spent hours getting his head around the different awards, pay rates, AH&S and complying with taxation and other obligations. There was no HR department. No payroll person. He was in charge of everything. Those duties were always there – even on his honeymoon and family holidays.
Danilo isn’t alone. His experience is representative of thousands of small businesses.
The Fair Work Act has 960 sections and over a quarter of a million words. On top of this, Australia has more than 100 industry awards, with hundreds more classifications within those awards.
Newly released NAB research shows business owners are spending up to 18 hours on compliance before hiring their first employee.
We have seen plenty of big businesses, with large HR and payroll departments struggle to comply. It’s nearly impossible for small businesses who really want to do the right thing.
So put yourself in the position of a migrant small business owner, who has adopted English as a second language…
The point is – if nothing changes, small businesses that want to grow their business or start a new venture, simply will not.
So what are some of the things that would have made life easier for Danilo or for any small business owner attempting to navigate this overly complex system?
Simplify it. Introduce a Small Business Award.
The Prime Minister was absolutely right just a couple of months ago, when he stood where I am standing today and said the current industrial relations system is not fit for purpose.
In this new world we live in , with business confidence at historical lows, the system needs to make it much easier for small business employers to be able to hire and manage staff, so they can get on with the job of running their business.
A Small Business Award would be simpler than existing awards and available to all small businesses on an ‘opt in’ basis. It would cover all staff, irrespective of their different duties and would include a ‘permaflexi’ classification.
Flexibility is key for small businesses. I was encouraged by the Treasurer’s
