On side with small business
Despite the importance of small businesses in generating jobs and contributing to the economy, the sector does not have a voice at the highest political levels. This puts increased pressure on accountants to guide their SME clients through a raft of unhelpful rule changes.
Unlike larger businesses, which have the capacity to directly lobby for change on issues affecting them, the impact of government policies on small and medium enterprises (SMEs) is often overlooked.
This is despite the fact that Australia’s small business sector employs about half the nation’s workforce. In New South Wales alone there are 650,000 small businesses, providing employment for 50 per cent of that state’s workers.
“Big business and special interest groups have the capacity to directly lobby government ministers for policies that favour their sector,” says Stephen Cartwright, chief executive at the NSW Business Chamber. “But who is lobbying their cause inside the cabinet room?”
Cartwright explains that while the NSW Business Chamber successfully championed the cause for the creation of a small business commissioner in NSW last year, the federal government needs to do more to show its commitment to the small business sector.
“The small business community now have a person in [the NSW] government batting for them. That’s an approach the Federal Government needs to adopt. A cabinet position for small business and a federal small business commissioner would go a long way to placing the health and success of the small business sector at the heart of government decision making,” he says.
Red tape
While Cartwright believes more should be done to help small businesses grow, the small business commissioner for NSW, Yasmin King, has been actively engaging with SMEs in the community since she was appointed in the second half of last year.
King says she is working closely with government agencies in order to inform policy and ensure the needs of small businesses are considered.
In fact, on a recent ‘listening tour’ of NSW, King says a number of critical issues were raised as key concerns for many small business operators, including:
- Regulatory burdens (compliance, often with multiple agencies);
- Government tendering and procurement processes (relating to small, local providers);
- Work, health and safety requirements (premiums, inspections, audits, appeal processes);
- Fair Work Australia (burdensome and with an advisory function which is not sufficiently practical to assist small businesses);
- Local government (regulation and planning decision making, fees and charges);
- Unfair market practices (retail sector, landlord and commercial issues).
A City of Sydney spokesperson responded to some of these criticisms over ‘red tape’, pointing out that a workshop on development applications for small businesses, for example, was held in November last year and follow-up workshops are planned for this year. “[These] will go further into the detail of the process and give applicants the opportunity to air specific problems they have encountered,” she said.
Apart from key challenges that many small businesses face from increased costs and regulatory burdens, there is continued uncertainty in the global economy.
While the strength of the dollar has been extolled by many, it has also had a significant impact on tourism. An increasing number of Australians are now opting to holiday overseas while foreign tourists stay away because the country has become less affordable.
Similarly, the retail and manufacturing sectors have also been hit as the number of Australian consumers shopping online for cheaper products from overseas vendors and cheaper imports and less competitive export pricing have all had an affect on the bottom line. All this has a negative impact on the small business community.
“Small businesses face a variety of cost burdens and it is always a juggling act for a small business operator to be able to manage those costs and ensure their business is profitable enough to grow and provide employment opportunities. There is no question that cost pressures are increasing, and margins are being squeezed as a result,” says King.
In addition to the substantial pressures placed on smaller businesses by external forces, the implementation of new taxes and legislation in 2012 pose significant threats to many businesses.
Expert advice
It’s here that many will turn to their accountants as trusted business advisers, so it’s imperative that this group is on top of the raft of new rules on the way.
Richard Reese, BankLink’s general manager of operations, agreed that it is critical that SMEs seek expert accounting advice. “The importance of good financial advice is paramount, particularly in ensuring the business owner is abiding by legislative and compliance changes and the added complexities that these bring. This, in turn, means that the role of the accountant is becoming increasingly diverse and the relationships they have with their small business clients are much closer and consultative in nature.”
The coming year will bring added complexities with the introduction of the much maligned carbon tax and its subsequent increase in the cost of energy. This, in turn, will have a knock on effect across the entire supply chain.
Similarly, changes implemented by Fair Work Australia will affect many SMEs.
“Small businesses in NSW are already battling significant headwinds. However, during 2012 the situation is likely to worsen due to the introduction of the ill-timed carbon tax and the continued upward spiral of award wage rates due to the so-called award modernisation process by Fair Work Australia,” said Cartwright.
The concerns surrounding the Fair Work Australia award process are that as base rates and penalty rates continue to climb, regardless of the capacity to pay by the employer, small business owners will face a rise in redundancies as they battle to survive.
The potential impact of these legislative changes demonstrates how crucial it is that SMEs continue to seek expert advice.
BankLink helps around 4500 accountants streamline the accounting process for more than 250,000 small business and self-managed superannuation fund clients. It has partnered with accountants for 25 years.
- Categories
- Banking
- Tags:
- Richard Reese, BankLink, SMEs
- Author:
- AB+F Online, mdavis@financialpublications.com.au
- Article Posted:
- February 15, 2012
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