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Budget 2022: It’s now time to focus on SMEs

The pandemic, which has been going on for almost two years, has been extremely taxing and difficult for small businesses worldwide, including in Australia. 

While businesses were gradually returning to pre-pandemic levels, ongoing lockdowns and global economic disruptions slowed things down again, and the businesses are still not out of the woods. 

Eliminating red tape and streamlining regulation, investing in the digital economy, cyber security, and workforce issues are a few of the most discussed issues that require priority in this budget.

As the Council of Small Business Organisations Australia (COSBOA) puts in its pre-budget submission to the Treasurer, “Our primary task is not fiscal; rather, it is about the government’s structural levers that the Government can pull to keep successful small businesses trading.”

Why streamline regulation? 

Every business owner faces plenty of compliance requirements to hire, be licenced, serve customers, or simply get started. 

The problem is that small businesses endure a disproportionate share of the burden of red tape because they lack teams of experts to navigate complex tax laws or keep up with changing workplace health and safety, industrial relations requirements, and local council laws. 

In addition to existing compliance tasks, small business owners must now comply with COVID-19-specific rules, making it more critical than ever to simplify the process to maintain the ease of doing business.

So what regulation should be streamlined? 

COSBOA made several specific recommendations for reducing the regulatory burden faced by small business owners, such as suspending the introduction of new compliance processes while small businesses recover from the pandemic.

  • Suspend the creation of new compliance processes while small businesses recover from COVID-19 
  • Simplify the industrial relations system with a small business model schedule, as well as reg tech and fintech solutions 
  • Continue COVID-19 deregulation measures such as allowing electronic signatures on all documents. 
  • Better incorporate industry consultation when creating compliance processes for small businesses. 
  • Re-instate the government’s business consultation website.   
  • Use industry associations to deliver programs designed to empower small business growth and provide small business advice.

Here’s the complete list of recommendations by COSBOA.  

Investing digital economy 

COVID-19 has accelerated the digitisation of all sectors and our reliance on technology. During the lengthy lockdowns, small businesses were forced to rely on websites, social media, and apps to engage with customers. 

While the Australian government recognised the importance of digital transformation to economic stability by investing in digital solutions, such as the $1.2 billion in its Digital Economy Strategy 2021, there is still much work to be done. 

In fact, Australian small businesses achieved the lowest growth rate in the Asia-Pacific in 2021, CPA Australia’s Asia-Pacific Small Business Survey revealed.

(Read the full story here)

COSBOA has recommended empowering small business owners to use technology to grow their businesses and participate more fully in the digital economy. 

This includes a suggestion for an initiative that would improve small business owners and their employees’ ability to access relevant information and respond to cyber security threats, which we will discuss in the next section.

Cyber security

Cyber security breaches can be catastrophic for all businesses, big and small. The Australian Cyber Security Centre (ACSC) has urged all Australian businesses to improve their cyber security posture in response to the heightened cyber threat environment and Russia’s invasion of Ukraine. 

In general, the Australian Federal Police is in charge of detecting, preventing, disrupting, responding to, and enforcing cybercrime offences that impact the entire Australian economy.

However, in the aftermath of Ukraine’s invasion, the ACSC issued an alert and a series of advisories encouraging Australian businesses and organisations to review their cyber security posture and strengthen their defences. Malicious cyber actors may target Australian organisations for espionage, service disruption, and money and sensitive data theft. 

These are compelling reasons for the government to prioritise cyber security in the upcoming budget. But for now, the ACSC has published the following resources to assist in combating cyber threats:

  1. The Small Business Cyber Security Guide helps businesses understand, take action, and increase cyber security resilience.
  2. Essential Eight is a baseline set of mitigation strategies that organisations can implement to make it harder for adversaries to break into their devices and systems. 

Workforce Shortages 

I saved the most pressing topic for last. Staff shortages have been a major issue for small business owners in all industries and across Australia, and they must be addressed immediately. The problem is complicated, with multiple causes, both acute and chronic. 

These include, but are not limited to, pandemic border closures, the bureaucracy and cost of sponsoring a visa worker, a lack of affordable housing in regional areas, and a lack of good pathways connecting employers and job seekers with relevant skills. COSBOA has provided suggestions for initiatives to alleviate this issue in the short and long term. 

“One short-term policy amendment requested was to relax the 20-hour per week working limit imposed on certain categories of visa workers such as international students in all industries for the next two years,” COSBOA stated in its submission.

“Now, to continue to address worker shortages, the government must explore other barriers which are restricting to skilled and unskilled workers from engaging with work. To encourage workers to engage with small businesses, we are seeking short term measures that address concerns around tax implications, reductions to pensions or family tax benefits, and higher tax rates. 

“Some of our long-term suggestions include initiatives to help bridge the gap between small business employers and job seekers with the relevant skills and ensure that vocational education and training students graduate with the skills sought by small business employers.”

According to COSBOA CEO Alexi Boyd, Australia is at a historic crossroads where small businesses face a high risk of failure.

“The compounding effects of COVID-19 increasing debt, fatigue, worker shortages, cost pressures from supply chain and the ongoing burden of keeping workplaces safe has led to many previously strong, viable small business vulnerable to closure. 

“This, in an inequitable environment where big businesses have emerged from the pandemic stronger than before.”

“Our primary task this year isn’t fiscal. Instead, we’re focussing on the structural levers that the government can pull to make small business owners’ lives easier and keep successful small businesses trading and thriving in the post-COVID environment,” she insisted. 

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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