A suite of business tax measures is to be repealed, but the Coalition government’s move is headed for a hostile Senate and Treasurer Joe Hockey needs ALP support to get his measures passed before July 2014. The moves will wind back Gillard government changes that increased the threshold for asset write-offs and retrospective tax claims. And incrementally increased super contributions for all employees will have a two-year pause in their introduction. A government co-contribution to the super of low-income earners will also be scrapped. The measures were tied to the Minerals Resource Rent Tax, which Hockey has a mandate to scrap. The Council of Small Business Australia chief executive Peter Strong said COSBOA had advised Hockey prior to the election not to repeal the tax breaks, because they were “good”. “You don’t want confusion, because that impacts confidence. The best thing they can do is say the MRRT has to go through Parliament, but these measures will stay,” he said. The reforms introduced in 2012-13 aimed to step-up super contributions from nine per cent to 12% by July 2019. The mandatory contributions have already risen to 9.25% but Hockey’s changes will delay their next step up to 9.5% until 2016. “Any reductions in businesses’ overall wages bills would lower their operating costs, while employees could also receive more take-home pay in the near term,” the draft document states. The bill also aims to repeal loss carry-back or the ability for businesses to claim up-to $1 million as a tax deduction on past years when they paid tax. Depending on tax rates and earnings, the move allowed loss-making companies huge rebates. Another sweetener, which let businesses write-off assets up to $6500 and the first $5000 of vehicles in the financial year they were purchased will be dramatically pared down. Hockey has scrapped the vehicle write-down and made assets worth up-to $1000 deductible in the first financial year. Any others would be depreciated 15% in the first year and 30% each year after that. Hockey said in a media release yesterday that the suite of changes would save the government $13 billion. “The former government linked a number of spending measures to the failed MRRT. These came at a significant cost to the budget, to the point where the government is borrowing money to pay for these commitments,” he said. CPA Australia backed Hockey’s repeals, saying they had been “telegraphed” prior to the election. "There are certain initiatives that we like and that business likes – such as the $6500 instant asset write off for small business – but given the budget challenges, tough decisions need to be made," a CPA spokesperson said. The exposure draft of the legislation is open for comment until October 31. The legislation is to be introduced in federal Parliament in November. Greens leader Christine Milne has said her party would not support the repeal of the MRRT. “We should be making the [MRRT] more effective by increasing the rate and fixing up the loopholes created when Labor caved in to the big miners,” she said. An official at ALP Leader Bill Shorten’s office said the party’s intentions would need to be debated at shadow cabinet, but they were opposed to a cut in the government’s contribution to low-income earner’s super. This story first appeared on SmartCompany.
Opposition Leader Bill Shorten has named none other than himself as the shadow small business minister, a move that’s been applauded by the Council of Small Business Australia. Speaking to SmartCompany this morning, COSBOA CEO Peter Strong said the appointment showed how seriously Shorten took the small business portfolio. “It was very surprising news,” Strong says. “He’s a very busy man – he wouldn’t do it for fun. This shows he does value small business. “In his various portfolios in the previous government, he would often talk about small business. One of the things he gets is that we’re people, not impersonal large corporations. And that makes a big difference.” Shorten is also shadow minister for science, as well as Opposition Leader, which suggests he wouldn’t have too much time to devote to the small business portfolio. But Strong applauds the team he’s put in place to assist him, which includes Bernie Ripoll, as opposition spokesman assisting the leader on small business, and Julie Owens, as shadow parliamentary secretary for small business. Strong says Owens, the member for Parramatta, has a large small business constituency in her district and has owned her own small business in the past, while Ripoll is a highly experienced parliamentarian “with a good head around SMEs, particularly the finance sector”. “Sure Shorten will be very busy, but he’s got a team there to support him,” Strong says. “I think that’s very good news.” It’s been a great start to the parliamentary session for small business, with the ruling Liberal-National Coalition placing Small Business Minister Bruce Billson in cabinet, and moving small business from industry and into the powerful Treasury department. “We’ve been given a much higher profile,” Strong says. On Friday, Billson spoke to SmartCompanyabout his priorities as minister. His first priority, he revealed, was to make it far easier and less “bewildering” for SMEs to access government services and grants. “The idea is to streamline it so they don’t have to be brilliantly knowledgeable about the federation to be able to access services which are of interest to them,” he said. This story first appeared on SmartCompany.
Home-based business owners will no longer need to share their home addresses through the National Business Names Register under changes to the register’s rules. The changes mean the Australian Securities and Investments Commission will give home businesses the option to protect their privacy by allowing them to register a postal address rather than a physical address. Small Business Minister Bruce Billson told news.com.au the changes, which had been sought by the Coalition, had been motivated by privacy concerns. "A year on we have finally been able to have the issue corrected and privacy assurance for home-based businesses realised," Billson said. Home-based business owners have been expressing concerns about providing physical addresses for their businesses since last year. Peter Strong, chief executive of the Council of Small Business of Australia (COSBOA), told StartupSmart the move was great news and was something that COSBOA had been seeking for some time. “It’s a very important step for people,” he says. “A lot of people don’t want their home address so easily found. “If you’re a woman who wants to keep her address safe because of a domestic situation, you’ll be able to now, so congratulations to the Coalition for bringing this change in,” Strong says, adding that enabling women in this situation to own businesses was the key reason they had campaigned for the change. Strong says there are between 800,000 to 1.2 million home-based business owners in Australia. “They do face different challenges, especially with isolation. Some people are working from home because every other option doesn’t work for them, such as if they have a disability or are looking after kids,” Strong says.
The business community has enthusiastically welcomed the news that Small Business Minister Bruce Billson has issued a warning to the Australian Tax Office to go easy on independent contractors and the self-employed. The comments fulfil a hope within enterprise that Billson’s appointment will plug a knowledge gap of small business issues in government. “This is very good progress,” said Peter Strong, chief executive of the Council of Small Business of Australia. Ken Phillips, chief executive of the Independent Contractors Australia, told SmartCompany he was “absolutely delighted”. “I’m delighted to have a government moving so quickly on these key issues – it’s really impressive,” he says, adding this announcement is yet more evidence the new government doesn’t simply think of small business as a token industry. “Bruce Billson has small business as his only title, and they’ve moved his department to Treasury which gives him a real authority. “This is quite a big shift and clear signal at the earliest stage of government that what they’ve said about small business being front and centre is being taken seriously.” Billson told The Australian Financial Review the ATO, along with the construction watchdog and the Fair Work Ombudsman, have been told to take it easy on independent contractors. “The issue is less about the law itself; it’s the way in which it has been administered,” he said. “There are hundreds of thousands of these courageous, enterprising, self-motivated individuals who are making a contribution to the economy but suddenly found themselves in the Bermuda Triangle as contributors to the economy.” Billson claimed the previous government had told these authorities to pressure contractors in order to move them towards employment agreements in which unions have more sway. “We’ve seen independent contractors … in the clothing, textile and footwear area engaged to do contract work now being told they have to be engaged as employees to get minimum hours.” Billson also mentioned a practice within the Tax Office to either refuse issuing of ABNs or withdraw ABNs from individuals. “We’ve had examples raised with us that the ATO has denied a business an ABN for reasons that were not clear but there is no avenue to appeal.” The ATO regularly reviews ABNs to determine if their holders are actually carrying on a business. The Abbott government has pledged one million new jobs during its term – Ken Phillips says in order to reach that number, it needs to focus on small business. “It’s good to see the small business is front and centre here,” he says. Peter Strong says independent contractors need to be protected if the government wants to promote the virtues of being self-employed. “This works hand-in-hand with fixing up contracting law,” he says. “The people who have been targeted have been victims, so you need to stop haranguing those who are doing the right thing. “This is about people who are looking to increase their income and aren’t doing it in any way that could be considered dodgy.” The Fair Work Ombudsman has been consistent in cracking down on the practice known as ‘sham contracting’, in which businesses classify employees as contractors in order to avoid paying them wages and entitlements.
The business community has won again. Just days before the federal election, Labor has announced it will increase the instant asset write-off threshold to $10,000 if it returns to government, in a last-minute pledge to business. The announcement caps what has been a lucrative campaign for small businesses, with both sides of politics announcing tax and budget policies which cater to the small end of town. The pledge also counteracts the Coalition’s announcement it will scrap the increased write-off threshold if it wins government. Peter Strong, executive director at the Council of Small Business of Australia, told SmartCompany the announcement adds “momentum” to the economy. “This is another example of what’s happened during the past few weeks with that focus on small business,” he says. “Given Joe Hockey wants to remove the tax benefits that have been announced over the past couple of years, the policies are coming much closer together with regard to small business.” At the Labor launch yesterday, Kevin Rudd said the Coalition was in for a fight as it heads to the polls this coming Saturday – maintaining a defiant stance although polls continue to drift in Tony Abbott’s favour. ''And for those who say the fight is up, I say they haven't seen anything yet,'' he said. ''Because we have something worth fighting for.'' Among other promises announced yesterday were a promise to keep investment projects tied to local suppliers and jobs, while Rudd also said the federal government would make states pledge to raise TAFE funding – or face a takeover by Canberra. Several other announcements were made regarding skills and apprentices, including lifting the current apprenticeship completion payment to $2000. The effort may be futile. The latest Australian-Newspoll survey shows support for the government has dropped to 33%. On a two-party preferred basis, the Coalition wins 54% to Labor’s 46%. But that hasn’t stopped Rudd from trying. This campaign has been mostly focused on small business issues, and the instant asset write-off is a prime example. When the threshold was last increased, small businesses welcomed the move as a boost to confidence. Tax experts are less convinced this time around. Deepti Paton, tax counsel at the Tax Institute, told SmartCompany while the figure is welcome, it doesn’t go far enough – the benefit only lasts for less than two years. The higher threshold will last until July 2015, after which it will return to the $6500 rate. “It’s a high number and certainly would boost the tax system’s capability to give small businesses an extra bump for additional investments, but you need to bear in mind this only lasts for 22 months.” “It’s welcome, but we would prefer an affordable long-term change to the tax system with regards to an accelerated deprecation scheme, rather than constant, short-term boosts.” “We should be building a tax system to last.” This story first appeared on SmartCompany.
Since Old Taskmaster was knee-high to a grasshopper, the clowns in Canberra have been stifling small business owners with red tape and regulation. While many business regulations are created with multinationals like BHP Billiton and Wesfarmers in mind, the same compliance hoops and taxes are also forced onto sole traders, small businesses and start-ups with far fewer resources. Unfortunately, despite the fact small businesses are the backbone of the Australian economy, the message just doesn’t seem to be getting through. Until now, that is. Thanks to Council of Small Business of Australia executive director Peter Strong – with a little help from YouTube – that message is now going viral. In fact, earlier this morning, the clip was doing the rounds here at Taskmaster Towers. Strong recorded a rap music video on behalf of small business owners and entrepreneurs across the nation, telling Kevin Rudd to start keeping it real on red tape. It’s a battle rap against bureaucracy. While it probably won’t force the likes of Snoop Dogg, Dr Dre or Kanye West to update their CVs just yet, the clip turned out better than you might imagine. If it hasn’t shown up in your email or on your Twitter feed yet, here’s the video everyone’s talking about: Now, you might think it’s a little silly. But it’s novelty value that causes videos to go viral on social media sites, including YouTube. So Old Taskmaster says it’s time to take a leaf out of Peter Strong’s book. If you use YouTube as one of your social media channels, don’t just upload a boring old ad. Instead, create a video with some novelty value to it and have some fun with it! Get it done – and bust a funky lyric!
If the Rudd government is re-elected to another term this year, it will legislate a move from the carbon tax to an emissions trading scheme effective from July next year, the government announced on the weekend. The move could see a carbon price of $6-$10 a tonne, Treasurer Chris Bowen said. However the price could be higher or lower based on market demand. Most analysts expect the price to be significantly lower than the $24.15 per tonne of carbon Australian businesses currently pay for their carbon emissions. What does this mean for your business? This has the potential to both help and hurt small businesses. Peter Strong, the CEO of the Council of Small Business Australia, says there are two main ways the weekend's announcement could impact the sector. The first is through its impact on electricity prices, and the second is through some of the positive business incentives that were funded by the carbon tax, which are now in jeopardy. "Not a lot of small businesses are directly affected by the tax, but its effect is in the power costs," he told SmartCompany this morning. "Part of the problem with the carbon tax was that few small businesses were able to pass on their costs to customers," he said. "That's because, if you're a supplier to Coles or Woolworths, they make it very difficult for you to do so." In June, research by the Australian Industry Group found 70% of businesses surveyed had been unable to pass on any increased energy costs to their customers, and only 6% said they'd been able to pass on the energy costs caused by the carbon tax. This has meant small businesses have largely absorbed the carbon price, particularly in manufacturing, which uses a lot of electricity. But they weren't the only ones affected. "Any retail shops or cafes that have a lot of fridges, or big freezer rooms, were impacted," Strong says. "If power bills go up $6000 a year because of the carbon tax, I think it's a lot of money." Professor John Quiggin, an economist at the the University of Queensland, told SmartCompany the carbon tax had raised electricity prices between 5%-10%. "So, if the price falls when we switch to emissions trading, which is what we're expecting, other things being equal we'd see a drop of somewhere less than 10%. But that's likely to be swamped by other factors." The biggest factor in electricity price rises in recent years has been a dramatic increase in the poles and wires charges billed to electricity users, Quiggin says. "And those are likely to rise further." The government has yet to announce many details about which programs are likely to be cut as a result of the move to an ETS, but has flagged it won't change the compensation offered to households. The carbon tax has funded some tax breaks for small businesses, including an increase in the instant tax write-off and the loss carry-back measures. This article continues on page 2. What do the industry bodies think? Most business groups have welcomed the move to an emissions trading scheme. "The government's decision to move early to scrap the carbon tax and commence emissions trading is a positive move that will cut business costs while still meeting the emissions targets shared by the major parties," Australian Industry Group CEO Innes Willox said yesterday. "We will be looking for more detail. But, in principle, a switch to much lower internationally linked carbon prices next year would be very positive for businesses struggling with high energy prices and lost competitiveness. "The earlier move to emissions trading would cut the carbon price by as much as three quarters, while not reducing our capacity to meet the objectives of reducing emissions in line with Australia's targets." However, the Queensland Resources Council has said the changes raise more questions than answers on Australia's carbon pricing. QRC chief executive Michael Roche said the government had a number of crucial questions to answer, including whether the scheme would allow European Union politicians and bureaucrats to effectively set Australia's carbon price, and whether the scheme would lock in Australian firms to buying local permits, excluding them from the European market. "If the federal government's answers to each of these questions is 'no', then clearly the intent is no more than a political fix in the shadow of an election, not the fundamental rethink that is so badly needed to ensure Australia's trade-exposed industries can be internationally competitive," Roche said. The earlier move to an ETS has been criticised as a "cowardly act" by the Australian Greens and "a name-changing exercise" by the opposition. What about the election? What would the Liberals do? The date given for a move to the ETS was July 2014, which is after the last possible date for the next federal election. This means the policy hinges on Labor being re-elected to government, a prospect which, until recently, looked unlikely. This morning's Nielsen poll is the latest to show the government and opposition neck-and-neck in the polls. But if the Liberal opposition does what is largely expected and wins government, its current policy remains to scrap the carbon tax. This would mean no emissions trading scheme, and instead, a range of "direct action" policy measures intended to pay businesses to reduce their carbon emissions. Some of these measures include paying businesses up to $40 per tonne (though usually less) to reduce their carbon emissions. This means the Coalition's plan values emissions at far above the $6 per tonne currently being proposed by the government. However, it would be a cost borne by the public out of general taxation, and not billed directly to polluters. This story first appeared on SmartCompany.
The shadow minister for small business, Bruce Billson, has raised concern over the future of the small business commissioner role after a department official said the initiative was “not an ongoing program” during Senate Estimates this week. Sue Weston, an official for the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, said there was no funding allocated for the role after 2015/16 as the current funding was appropriate for the set life of the program. She also described the role as “not an ongoing program”, during questioning by Liberal Senator Scott Ryan. Billson told StartupSmart he was concerned and surprised at the confirmation the small business commissioner role wasn’t an ongoing one. “Much has been made by Labor of this one measure, and now it’s got an end date on it as well. It further adds to the view that this government is just not interested in small business,” says Billson. Billson has previously raised concerns over the “revolving door” of Labor small business ministers and the commissioner’s lack of legislative power. “The issues and challenges facing small business are very significant and diverse. You need a genuine commitment to the sector, ongoing engagement and to do the work that’s needed to identify policies that will work,” says Billson. The current commissioner, Mark Brennan, began his role in January 2013. He previously served as the Victorian small business commissioner for seven years. A spokesperson for Small Business Minister Gary Gray told StartupSmart the commissioner position was always set to be reviewed two years after it began. “Mr Mark Brennan commenced work just five months ago. It is important that Mr Brennan is given time to shape the role and ensure that Commonwealth agencies remain focused on small business,” the spokesman says in an email. Peter Strong, executive director of the Small Business Council of Australia, says the commissioner role will be reviewed in 2015/16 and new funding would be allocated if the findings were in favour of continuing the role. “It would be very difficult to imagine it wouldn’t be a positive review that the commissioner should have more powers and better defined,” Strong told StartupSmart. Strong added if the commissioner was to achieve goals, he would need legislative power to do so. The small business commissioner role was announced in March last year. It was launched to advocate for small business in government decision making and to work across industry and other groups to encourage a coordinated approach to challenges small business owners face.
Small businesses are already disappointed with the major banks, but newly released survey results show the relationship between the big four and SMEs has soured even further. The release of Roy Morgan data regarding bank satisfaction comes as the Small Business Council of Australia (COSBOA) hosts a roundtable in Canberra today, in order to discuss the current problems facing small business access to finance. Roy Morgan data released yesterday shows satisfaction among the big four's business customers in April was just 63.7%, down from 64%, and still well below the satisfaction level of personal customers, which sat at 78.9% in April. The figures show the satisfaction gap between small businesses and banks has continued to widen, with personal customer satisfaction improving by 2.4 percentage points compared to business satisfaction, which has fallen by 0.4 percentage points. Westpac leads the survey, followed by the Commonwealth Bank, NAB and ANZ. The Commonwealth Bank moved up three percentage points over the past year – the only one of the big four to improve – and ANZ has fallen by 4.4 points. The satisfaction differs between different-sized businesses. The micro segment, with turnover less than $1 million a year, was the least satisfied segment at 63.3%, but the segment covering businesses with over $55 million in turnover didn't record any significant improvement, at just 67.6%. Norman Morris, communications director at Roy Morgan, said in a statement the banks are continuing to struggle. "It is obvious that a poor rating among business customers will impact on personal customer ratings yet this is often not clearly understood. In the case of the approximately two million small businesses; the owners' personal and business interests are closely interlinked, as is their banking." Part of the dissatisfaction comes due to interest rate levels. Although the banks have passed on the most recent rate cut to business products, traditionally business loans attract higher interest rates and banks are loathe to pass on any cut in the official rate. Peter Strong, executive director of COSBOA, told SmartCompany this morning the findings are apt given today's conference about small business access to finance. "I think this reflects just a drop in confidence in general," he says. "The other disappointment we're seeing is the difference between interest rates for consumers and businesses. They've come back closer, but why is there even a difference?" Most recently the big four passed on interest rate cuts to business customers, although ANZ was the only bank not to extend the same rate cut to business customers as individual mortgage holders. Such problems are what Strong hope to address today at the roundtable with attendees including Steven Munchenberg, the chief executive of the Australian Banking Association, along with COSBOA board members and a range of experts. Other topics of discussion include identifying the specific types of SMEs which want to grow, and how many of them need access to credit. "We just want more information," Strong says. Earlier this year the small business community was disappointed by the news the federal government would back down on legislation which would regulate small business credit. This story first appeared on SmartCompany.
Small business will be slammed by three cost increases in the new financial year: An increase in the minimum wage, another 0.25% rise in superannuation contributions and an increase in penalty rates for many retailers, according to the Australian Chamber of Commerce and Industry. The Australian Council of Trade Unions is before the Fair Work Commission today lobbying for a $30 per week award wage rise across the small business economy, and ACCI is characterising the push as a raid on the payrolls of hard-working small employers. ACCI is proposing a rise of no more than $5.80 per week, a position which it says is consistent with last weeks “alarming” budget forecast. David Turnbull, director of communication at ACCI, told SmartCompany an award wage rise would weaken business viability, reduce profitability and cost jobs. “If the union claim gets up and there is an increase of that magnitude, it will come at the same time as an increase to the superannuation guarantee and increasing costs under modern awards that continue to be phased in,” Turnbull says. “We’re referring to it as a triple-whammy, at a time when businesses are under significant strain you can see why we would be concerned.” ACCI is calling for a specific superannuation wage offset and says without this the increase to the superannuation guarantee will hit hard. Small business will also be impacted by the next round of rate increases with casual loading going up 24% and penalty rates increasing from July 1. Peter Strong, executive director of the Council of Small Business Australia, told SmartCompany “without a doubt” the increases would all hit small business. “What is difficult for small business is passing costs on, which is proving more difficult the way landlords work and the way the big supermarkets like Coles and Woolworths work,” Strong says. “The government often says if there is an increase in costs pass it on to the customer and that is easy to say, but in the past decade that is more and more difficult as the big supermarkets won’t let small businesses put up prices.” Strong says businesses will also be hit by the administrative costs of implementing the increased costs on July 1. “The other problem that confronts us is red tape, every small business has to dive into their software and change the super contribution, it’s not like a pay rise, super is more difficult,” he says. The FWC’s annual review of the minimum wage concludes today.
Small business advocates have delivered a mixed response to Prime Minister Julia Gillard’s announcement yesterday of a $12 billion budget shortfall, saying now is a good time to introduce some much-needed tax changes. However, some advocates and economists have warned the announcement may have a detrimental impact, with Gillard warning that new taxes may be imposed in order to pay for new spending on disability insurance and education. Finance Minister Penny Wong told the ABC this morning the government is considering a wide range of options, and did not deny the possibility of a levy to fund the National Disability Insurance Scheme. While economists say the deficit is not an economic problem, as Australia’s credit rating is secure, the impact on confidence could impact businesses. “The impact here is more on confidence and uncertainty,” CommSec economist Savanth Sebastian told SmartCompany this morning. “Until we get confirmation about what measures are put in play, that will be a concern. We’ve seen some improvement in confidence, and further cuts to tax concessions could have a detrimental impact.” Gillard said yesterday the budget will be affected by a drastic fall in revenue of about $12 billion. The Australian Financial Review has reported this will translate into a deficit of between $16 billion and $17 billion. Gillard also said yesterday the shortfall would mean putting “every reasonable option on the table” in order to plug the gap, “even options previously off the table”. The Prime Minister said the government would spend “less in some areas than we had hoped, to raise more in revenue in some areas than we had planned”. While the government has not targeted any specific areas, previous speculation had pinpointed self-managed superannuation and high-income earners as potential sources of revenue. Peter Strong, the chief executive of the Council of Small Businesses of Australia, told SmartCompany this morning the government should consider financing SMEs in order to boost medium-term growth. “We need to have better targeted funds for businesses that are identified as growing quickly,” he says, also adding the government should consider taxing purchases made overseas in order to raise GST revenue. However, Strong says the size of the deficit isn’t necessarily an issue for small businesses, per se. “At the micro-level, we look for solutions. What this suggests to me is that we need to get our micro-economics right.” Savanth Sebastian agrees the size of the deficit isn’t necessarily a large problem, especially as it has shrunk since last year, but points out the impact on confidence such a big budget gap could have. “We’ve seen some improvement in confidence, and that translates to business confidence,” he says. “Further cuts to tax concessions and revenue can have a detrimental impact on that early boost to confidence.” Sebastian also says the deficit means the Reserve Bank is in a position to ease interest rates even further. However, not every business group is so pleased. The Australian Chamber of Commerce and Industry released a harsh response to yesterday’s announcement. Head of economics and workplace relations Greg Evans said the latest writedown “puts the onus on the government to properly deal with spending”. “Business is indicating that a major cause of uncertainty is the inability for the government to get its fiscal house in order and to set out a pathway back to surplus.” “This has become our number one economic priority as without a sustainable budget there is no scope for the major economic reforms required such as delivering a tax system that promotes incentive and enables productivity improvements.” This story first appeared on SmartCompany.
Above: Opposition leader Tony Abbott. The Liberal Party will abandon its promise to cut company tax by 1.5%, should it be elected, new reports have suggested, disappointing business groups which have long called for a cut in this tax rate. Opposition Leader Tony Abbott (pictured above) has consistently said he would fund a $3.3 billion parental leave scheme by raising company tax a further 1.5% on the biggest 3,200 companies while introducing a cut of the same size for other businesses. In net terms, this would have resulted in companies outside the top 3,200 having a company tax rate of 28.5%, down from the current 29%. But now, sources have told The Australian Financial Review a 1.5% tax decrease was still possible, but unlikely. This would mean the top 3,200 companies are slugged with an extra tax but other businesses would receive no relief. A spokesperson for Shadow Small Business Minister Bruce Billson told SmartCompany commitments can only be made based on the latest information. “As of the last budget we believe that we can introduce a modest cut to company tax,” he says. “Unlike the Government we will not make reckless spending promises without taking into account changing budget forecasts and a deteriorating budget position.” The move, if it is accurate, is sure to disappoint businesses. The business community reacted negatively last year to the Government’s announcement it would abandon a company tax cut for SMEs. Abbott yesterday reaffirmed his commitment to the paid parental leave scheme and said it would be funded by increasing the company tax rate for Australia’s largest 3,200 companies. “It's been a signature policy of ours since early 2010 and I want this important reform to be one of the things for which an incoming Coalition government is remembered,” he said. “I want to stress that this isn't just a women's issue, it's not just a families issue, it's an economic issue and if we can get more women productively into the workforce, that's good for the economy as well good for families as well as good for society.” Earlier this year SmartCompany investigated the policy changes small business leaders wanted to see this year and a cut in the company tax rate was a regular feature. SmartCompany contacted the executive director of the Council of Small Businesses of Australia, Peter Strong, but he was unavailable to comment prior to publication. Executive director of the Australian Retailers Association, Russell Zimmerman, previously told SmartCompany changes to the current tax system are needed. “If there are good reasons to make changes, changes that make more economic sense, then surely we should make those changes,” he said. Chief executive of the Australian Industry Group, Innes Willox, was quoted in The Australian Financial Review as saying there were “deep concerns” about Abbott’s parental leave scheme. He said the proposal would, “put a huge additional cost on bigger companies”. “At times like these businesses need reductions on cost burdens, not new ones”. The move comes alongside an admission from the Opposition the budget may not return to surplus for some time, with Opposition Treasurer Joe Hockey signalling a longer than expected wait. “We are not going to go down the path of austerity simply to bring the budget back to surplus because it would end up being a temporary surplus, depending on how big the deficit is that we inherit,” he said yesterday. Earlier this year Hockey pledged on ABC Radio’s AM program the budget would be returned to surplus in the first year of governing, “and every year after that”. This story first appeared on SmartCompany.
Small and medium-size businesses are most likely to fail because of an inability to manage costs or anticipate rising costs, according to a survey of more than 1000 Australian owners of SMEs. The survey, published yesterday by accounting software provider CCH and global information services group Wolters Kluwer, revealed SMEs see inexperienced management, a bad business model and lack of access to capital as other key reasons for small business failure. Of those surveyed, 61% of SME operators said small businesses failed because of an inability to manage costs, 50% said inexperienced management, 50% said poorly designed business models or no business plan, 49% said insufficient capital, 37% said poor or insufficient marketing, and 35% said insufficient time managing the books. Respondents were able to pick multiple reasons for failure and only 26% identified failure to seek professional advice as a key reason for failure, while 70% trusted their "gut instinct" over any professional advice. But the chief executive of Wolters Kluwer Asia-Pacific, Russell Evans, told SmartCompany the majority of SMEs which shun professional advice were doing so possibly at their peril. Evans points to a separate CCH survey of more than 210 accountants servicing small businesses which ranked bad business models as the main reason SMEs fail. This view is backed up by ASIC data on 5600 business failures in 2011-12, which cited poor strategic management as the most common cause of failure, attributed to 19% of SME failures, with another 15% of failures attributed to poor financial control. "It's a contrast, as if you look at the reasons why an SME owner feels an SME has failed it is inability to manage costs, while the accountants say it is a poorly designed business model," Evans says. "A lot of SME owners are fixated on their craft and what they do and they tend to chase revenue, they may send out lots of invoices and not understand the cost drivers." A typical problem for SME owners is buying lots of inventory of the wrong sort of product because they feel revenue means success, according to Evans. He warns a lot of small businesses are failing to identify they are introducing costs into their businesses which are eroding their margins. "SME owners are incredibly busy until the day they go broke, but accountants say because they have seen this before they can provide advice not just about revenue drivers but profit drivers," he says. Evans says the first couple of years of an SME's operation is often identified by SME owners as a make or break period. "If that is the make or break period they should be reaching out to professional advisers for more than just doing tax returns," he says. CCH's survey found SME owners typically open up to the advice of their accountant as their businesses grow. SME owners with a higher turnover of $1 million plus were more likely to consider their accountant as their most trusted adviser, not only for transactional accounts but for advice on business growth, than owners of businesses with turnover under $1 million. Peter Strong, executive director of the Council of Small Business Australia, told SmartCompany relying on gut instinct rather than professional advice is common in small business because it works. "If you don't use gut instinct then you become very slow at responding and that is not the nature of small business," he says. Strong says there are areas for small business where professional advice is needed."I wouldn't employ gut instinct in filling out a form or around financial management and anything to do with cashflow, marketing and long-term planning, we all need assistance with that," he says. But Strong warns the survey results are problematic as they do not split SMEs by industry. "It's a continuing problem of putting all SMEs in the same bucket; if you went to different industry sectors you would find some talk a lot to professional advisers, for example, real estate agents use a lot of professional advice," he says. This story first appeared on SmartCompany.
Small business leaders around Australia are concerned the appointment of Gary Gray as the sixth small business minister under the current government creates further uncertainty about the direction of small business policy in Australia. Given Gray has also been handed responsibility of the resources, energy and tourism portfolios, SME advocates believe he will not be able to adequately dedicate his time to understanding the needs of small business. Council of Small Businesses of Australia executive director Peter Strong told SmartCompany he’s disappointed by the rate of turnover in the position. “We run on confidence, but it’s hard to be confident when we’re unsure of the future. There have been a lot of surveys done and uncertainty is the biggest problem,” he says. “I don’t know how much he understands, we’ll have to see if he understands the issues facing small business about competition law and consumer problems.” “He needs to sit down and give the industry confidence and set some policies.” Prior to his position in government, Gray worked with companies such as BHP Steelworks, Wesfarmers and as an advisor to Woodside Petroleum. Strong says when it comes to the small business minister, background is important. “If you have a background like [Opposition Small Business Spokesman] Bruce Billson does in small business, then you are more likely to understand the problems businesses face.” Without that, Strong says it comes down to the attitude Gray has and if he has the capacity to understand the fact we’re not just business we’re people,” he says. SmartCompany contacted Gray for comment but received no response prior to publication. Australian Retailers Association executive director Russel Zimmerman told SmartCompany Gray won’t have the time to develop an understanding of small businesses prior to the September election. “It would be nice to see a person allocated the role stay in it long enough to be able to get to understand small businesses.” “It’s going to be hard for him to get a grasp on the portfolio. If they are returned again, we hope they’ll bring some stability,” he says. Zimmerman says an election needs to be held because the government has recently become a “farce”. “I think there was a good reason for the government to go to the people because it’s become a farce,” he says. Zimmerman says he’s also concerned with the number of responsibilities Gray is taking on board. “Tourism and small business go hand and hand, but certainly his other role will not be necessarily associated with small business,” he says. Gray is yet to communicate with Zimmerman or Strong, but both industry representatives say they hope he will do so soon. Accounting group MYOB released a new report today which found SME dissatisfaction with the federal government remains high at 54%. MYOB chief executive Tim Reed told SmartCompany the number of recent small business ministers is “appalling”. “It’s a message which says government policies have not been well explained to small business owners,” he says. This story first appeared on SmartCompany.
Irate business groups across Australia have slammed Prime Minister Julia Gillard's announcement yesterday confirming penalty rates are here to stay.
Under an Abbott government, the Productivity Commission could be charged with overhauling workplace laws, but penalty rates will remain unchanged.
The country's banking regulator has said it will start cracking down on banks if it believes lending standards have become too relaxed, as some reports have indicated, but business leaders say SMEs are still strapped for cash.
Two weeks after his appointment, Chris Bowen has finally spoken up as the country's newest small business minister, but his criticism of the Coalition's small business policies hasn't been wholly accepted by the community he has been chosen to represent.
Business leaders have criticised the federal government's proposal to have workplace bullying complaints heard by the Fair Work Commission, saying the move will increase confusion and encourage "forum shopping".
It’s only been a few weeks since Mark Brennan stepped into his role as the inaugural Australian small business commissioner, following the announcement of his appointment in October.