10 things on start-ups’ Budget wishlist
When Wayne Swan steps up to make his Budget speech tomorrow, he faces a number of pressures, not least bringing Australia back to surplus while retaining some popular elements of welfare that will aid a chronically unpopular Labor Government in the polls.
These challenges may not bode well for start-ups, which would favour a sizeable cut in red tape, while also seeing their businesses and consumer spending supported by smart initiatives from the Treasurer.
While one measure, the “carry-back” tax break, is already in the bag – and has been warmly welcomed by small business lobbyists – it remains to be seen what else Swan’s set-piece speech will deliver for innovators.
So, with our fingers firmly crossed, here are 10 things we’d love to see from this year’s Budget.
1. Common sense on the budget surplus fetish
The lead-up to the Budget has been dominated by talk of whether Swan will unveil a fiscal surplus – a goal that has far more political than business meaning.
The obsession with surplus is just another symptom of the Lilliputian thinking that often dogs political and economic debate in Australia. But it is also harmful in a practical sense for start-ups.
While business owners want a government that is financially responsible, they also want one that talks about how it will aid innovation, growth and fresh thinking. Sadly, this Budget looks unlikely to dwell on any of these topics.
Gavan Ord, CPA Australia's small business policy adviser, told SmartCompany that the government is focused on getting a surplus “come hell or high water”, adding: “There is no talk in Australia about how we are going to support growth in the economy.”
2. More, not less, help for non-mining firms
The mining industry is getting a little jittery over this year’s Budget, following a series of public battles between some of its most successful members and the Treasurer in recent months.
A new Minerals Council of Australia paper attempts to debunk the belief that miners aren’t paying their fair share of tax and receive cushy subsidies.
Whether you buy into this report or not, it’s undeniable that the mining industry is soaring ahead of the pack.
Indeed, research out last week shows that a small business’ chance of getting credit from the bank drops sharply if the venture isn’t located in a mining boom state.
Swan must introduce some specific measures to help non-mining businesses, other than hack away at spending that will aid them, in a blinkered attempt to reach a surplus.
As an ANZ report on the Budget stated last week: “Our main concern, not knowing the full extent of cuts, is that the fiscal consolidation will be too hurried, and place additional pressure on the lacklustre non-mining economy.”
3. A national start-up strategy
How about this for a bit of moderately big thinking – an actual government-funded strategy for Australian start-ups?
The Government could even take the bold step of pushing forward several entrepreneurial heavyweights to provide much needed inspiration and leadership to start-ups.
Australia sorely lacks a big-name business leader, such as a Richard Branson in the UK or a Sean Parker in the US, who is prepared to act as a high-profile figurehead for innovation.
The best we seem to be able to do is watch Mark Bouris wag his finger at David Hasselhoff’s goofing around on TV and read about how mining billionaires don’t like paying tax.
As an innovative nation, can’t we do better than this? A working group, a committee, anything?
4. Better definition of small business
The term “small business” is rather loosely defined in Australia, with larger businesses often able to jump through regulatory loopholes in order to scoop up incentives aimed at the smaller end of town.
As Peter Strong, executive director of Council of Small Business of Australia, puts it: “Over the last two decades… most processes and policies have been designed for big businesses and, as a result, a lot of small business people have struggled.”
“But how do we define a small business in a way that can be easily regulated by government agencies? Do we use turnover, number of employees, assets or some other means?”
“This is important for the purposes of taxation, workplace relations, OH&S processes, competition policy, contract law, local government issues and the like.”
5. A smarter approach to red tape
Red tape is a perennial bugbear of the small business owner and the issue has certainly been under the microscope since the last Budget, with calls to streamline workplace regulations and environmental compliance rules, or “green tape.”
COSBOA’s Strong says that retailers’ workplace relations is a key area for red tape reduction, pointing out that the Fair Work Ombudsman found 26% of retailers were not compliant with the Fair Work Act, while just 1.8% of those with a paymaster were non-compliant.
“This shows that the Fair Work Act is the problem, not the retailers,” says Strong.
“The system really has been designed for paymasters, not small business.”
6. A unified approach to skills
While mining companies regularly grab the headlines by demanding cheap overseas labour to plug their problem with skills shortages, other businesses are also finding the skills situation tough.
A Bankwest Skills Shortage Survey last month found that two in five Australian businesses are finding it hard to recruit, with more than a fifth having to turn down to work due to a lack of staff.
Budget-driven investment into a co-ordinated skills strategy could ease the burden on start-ups, but such a move looks unlikely in our surplus-obsessed times.
The CPA’s Ord told SmartCompany: “We are guessing there will be some skills packages and things like that, but because of the surplus fetish there are a whole lot of piecemeal approaches to approving productivity.”
“What we need is a more thoughtful, root and branch measures to improve productivity.
“Last year the Budget included a few things around apprenticeships and vocational skills and we expect to see that again.”
7. Halting the cutbacks in business advice
The establishment of a dedicated helpline for small businesses is one of the Federal Government’s few unqualified successes when it comes to the SME sector.
However, this phone-based service has arrived amid a worrying decline in face-to-face help for budding entrepreneurs.
In March, the Wagga Wagga Business Enterprise Centre closed due to shrinking federal and state funds, becoming just the latest BEC to face the chop.
In South Australia, the advice centres have been decimated, along with Business SA and Innovate SA, by state government cutbacks.
John Rumens, director of the Wagga BEC, told the ABC: "We're not alone. Wagga's one of a number of Business Enterprise Centres that have gone to the wall over the last several years."
"And I imagine there will be others, indeed, that are likely to go the same way.”
8. New funds for business mentors
Start-ups don’t only require an advice centre to drop into once in a while, they require ongoing, specialised mentorship from business leaders who have seen and done it all.
Alas, although functions such as mentor speed dating have emerged in recent times, there is no integrated mentor network for new entrepreneurs to call upon.
A Budget-funded mentor network is most needed in areas such as tech, where, as StartupSmart has exposed, there is a chronic lack of female figureheads for the next generation of women-led web businesses to connect with.
9. Better support for start-up hubs
While he’s going about building an advice and mentorship infrastructure for new businesses, Swan could also commit genuine resources to keeping our brightest start-ups in Australia.
In February, we were confronted by the rather odd sight of the NSW state government funding local start-ups to relocate to innovation hub Startup House in San Francisco.
Here’s a crazy idea – instead of encouraging our best start-up talent to flee Australia as soon as possible, why don’t state and federal governments actually fund our own versions of Startup House and boost growth, jobs and prosperity in our own country?
10. Go French
François Hollande, who has just become France’s first Socialist president since 1995 after his electoral triumph over Nicholas Sarkozy, at first seems an unlikely natural ally of entrepreneurship.
But some of his small business ideas are worthy of consideration by Swan. For example, he plans to launch a publicly funded bank for small businesses and slash the SME tax rate to a mere 15%.
Putting aside France’s soaring unemployment and struggles with debt for one moment, why not deploy a bit of Gallic thinking, Wayne?