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The new Government and SME’s

What do you think the change in government means for SMEs? What will be the key impacts and how should small business owners adapt to the new government?

Gavan Ord, business policy adviser, CPA Australia 

It is clear that the Government’s intention is to unwind Work Choices, however the details have yet to be released. While the media and public focus has been and will continue to be on industrial relations, SMEs should be aware that the Government has made a number of election commitments that may present challenges for small business owners.

Election promises made that would impact on small business include:

  • * Various initiatives to reduce red tape, such as simplifying the BAS by allowing businesses with an annual turnover of under $2 million to take a snapshot of their net monthly GST payments twice a year and apply that ratio for the rest of the year. Another initiative is establishing a free superannuation clearing house service for businesses with less than 20 employees, to handle the checking and distribution of contributions to superannuation funds.
  • * A three-year small business 'family friendly' work policy costing $12 million.
  • * Addressing Australia’s skills shortage with new initiatives that will replace the use of skills vouchers introduced by the previous Government.

As with any government commitment, businesses need to be aware of what was proposed and to respond when the detail of each policy is finalised.

Richard Evans, executive director, Australian Retailers Association

Immediately, not much. Trade within the market will continue and most indicators of an affect on the economy won’t come until major economic policy and thus legislation is changed. Will ratifying Kyoto affect the market? Not at this late stage of its diminishing lifecycle but it would be wise for savvy SMEs to focus on strategy that will provide them with ‘climate’ friendly practices for the future. Will a change in workplace law affect the market? Possibly by transferring permanent part time employees back to casual labour. This will directly affect these employees and their borrowing capacity under a casual work status compounding job security. If penalty rates and other benefits have been traded for increased hourly rates under AWAs then we will see either prices going up or hourly rates dropping as these so called benefits return. Which ever is the result of tearing up AWAs it will feed itself into the economy with either increased prices or decreased disposable income … but this possible paradigm is a long way off. The bottom line on a new government is that it is good for the social capital and confidence of those that supported change and thus a steady as you go scenario is more likely. The Rudd Government has already indicated it is an economic conservative so changes to SME prosperity will be sometime off. The significant change to watch for will be to the affect of demand once the changes to workplace law are felt.

Siimon Reynolds, creative director, Love Communications

I don't think SMEs should even think about the impact of the new government.

It is critical entrepreneurs have a philosophy of total individual responsibility. In other words, they should believe that ‘If it's to be, it's up to me’. Not a government, not any organisation. Business owners must be mighty forces of individual power, creating a firm vision irrespective of who's in power, then attracting others to that vision by the sheer magnitude of their belief and drive.

Sarina Russo, founder, Sarina Russo Group

Kevin Rudd has put forward a new direction for Australia and his new Government brings with it energy, excitement and a degree of anticipation.

The challenge for small business will be to keep an eye out for beneficial business opportunities. For example, the Prime Minister's Education Revolution is potentially a massive boost for a whole range of industry sectors from IT to computer retailers (tax rebates for laptops).

It can also never be forgotten that small business is an engine room for job creation. The new Government’s determination to tackle skill shortages through increased training places is an extremely positive step as is their support of a more responsive training system and programs to maximise the rate of workforce participation.


However, any changes to workplace relations laws (particularly unfair dismissal laws) must encompass the principles of flexibility productivity and fairness.

For this to happen, small business lobby groups must actively engage the new Rudd Government to ensure your key messages are heard.

Geoff Greer, regional general manager, nabbusiness

The new Labor government has committed to a wide-ranging program of business reform and deregulation. Be sure to monitor the changes closely, as there may be a raft of opportunities to take advantage of.

Labor has also signalled that it will give more attention to competition policy and the related issues of market share and the exercising of market power. The SME sector should monitor the respective legislation such as the Trade Practices Act for any favourable changes

This is a key time for business owners to ensure they have access to the best advice available to them. Understanding new opportunities in their market or industry enables business owners to act quickly and maximise any benefits from these changes.

Suzi Dafnis, general manager, Australian Businesswomen’s Network

As the Australian Businesswomen's Network (ABN) represents a community of over 20,000 businesswomen and female entrepreneurs, I took the question above to our membership for comment.

While there was an overall feeling amongst members that it was too early to be certain, the general consensus was one of concern about the impact of the new government on SMEs.

Overall, our members felt that the key impacts will relate to industrial relations. Members reported that the new government’s stance on unfair dismissal laws would impact negatively on business and employees, as it could result in SMEs hiring slowly and firing fast, increasing employment and training expenses, as well as disrupting operational activities.

Similar concerns were expressed about the 24-month parental leave entitlement, not only because of the employment and training costs, but also because an SME could have completely changed in two years, with a consequent change in the skills and experience required by the returning staff member. Respondents to our poll felt that this policy could in fact represent a disincentive for SMEs to employ women of childbearing age.

Labor’s policy on increasing SME access to the government procurement market was not felt to be a particularly useful initiative, due to the time consuming and costly process required to prepare and submit a response to tender while running an SME’s daily activities. In fact one member remarked that it was ‘useless’.

Potential changes to the Training Incentive Program were also noted as being of concern, in terms of the cost that may end up being borne by SMEs; and members also expressed concerns about a return to the high interest rates that were in force during the previous Labor government.

One member suggested we could expect to see increased government funding, incentives and programs related to innovation and green business, while another sought more leadership from our government in the areas of environmentalism.

Overall, not a positive response, but in the true entrepreneurial spirit, perhaps the perspective of the ABN could best be summed up in the words of one respondent—“I look forward to some turbulent times, but as SME’s are the backbone of this country, we will survive!”.

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