201404.30

Small Business Forum with Karen Andrews MP and Mudgeeraba Chamber of Commerce, Mudgeeraba

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Thank you for the invitation to be here tonight. I want to acknowledge my friend and colleague, Karen Andrews MP and Ms Ros Bates MLA – Member for Mudgeeraba. I would also like to acknowledge Councillors and Chamber of Commerce members who have come along tonight.

I learnt something tonight about your patch from Moira at the Hot Tomato radio station – apparently you’re all known as “Mudgeeraberans”. I’ve never heard that term before and I said that to her and she said ‘I hadn’t either – I just made it up.’ So it might catch on, it might not but either way, it’s good to be here.

I have enormous respect for all members of Chambers of Commerce and the time they volunteer to be there for each other especially when times aren’t flash. They are a crucial part of our enterprise economy and I thank all the chamber chairs and members. If you’re not a member, get involved. It’s a really useful way to meet fellow business owners and employees and as I’ve found in the small business community, it’s very rare to meet someone with a new problem. In most cases someone else has already experienced it.

They are good pathfinders; the learning that is available from the expertise around here is one of the many great benefits of the chamber movement.

I would like to thank you all for your contribution to enterprise and the vibrancy of communities. If you think about communities without your contribution, they would be dormant. We need livelihoods, employment and economic activity to survive.

In the community that I come from we have no mine, we have no tower of banking executives. We have small businesses and family enterprises so that people have the opportunity to contribute to the economy.

All of you are part of that story and it’s a story that we think is not shared widely enough with those that haven’t lived the dream of small business. I say live the dream with a touch of irony in that as my wife and I are ‘former’ small business people. I say ‘former’ because we didn’t succeed, we failed. We had a crack, we still have a behemoth mortgage – one of biblical proportions with very little to do with our house and a lot of it to do with our enterprise.

We loved every minute of it, to be honest with you, but there was not a day that went by that we weren’t thinking about how to make it more successful. I still remember the $4667 per month we paid in rent in Mornington in Victoria – the same price as South Bank in Melbourne. We knew that if the weather was poor, it would affect our numbers but we stuck at it, tried everything and we failed.

So I don’t stand before you as someone who is a small business messiah on your business, I would never do you that discourtesy but what I hope to convey to you is that I have been on that journey and I’ve learnt a lot. I understand, have felt and have lived the pressures that are there and above all, when I talk to people even in my own department, where they can give me the greatest analysis of the condition of the economy generally, the overarching metrics on what’s happening, I say to them you need to dig deeper. You need to dig past those aggregate numbers of what’s going on in small businesses and family enterprises. You need to understand that this isn’t a sector of the economy, this is personal. It is personal in terms of the commitment and passion that’s needed to take those risks and have a go.

I do draw a contrast and it’s no discourtesy, to the Captains of Industry – those men and women that lead our major corporations, for whom at times disappointment may see their careers truncated and maybe even a nice handsome payout when they leave. That is a level of commitment that deserves to be respected and a level of expertise that we should embrace. But it’s different when it’s your business, when you are the one investing, when it’s your money, it’s your assets and it’s your future.

Recently I had someone that was one of those captains of industry who was incredibly successful and decided he would retire and try something else. He decided he would try a franchise. He was in my office a few weeks ago in tears. Not only has he lost his money but he is facing losing his house. He said to me ‘I thought Bruce with all the expertise I could bring, I thought I could make this work.’ And I said to him it’s like breakfast. If you have bacon and eggs for breakfast, you look at it and think yeah the chicken is involved but by golly the pig is committed isn’t it?

I said to him that’s the difference about being a small business person compared to being a corporate captain. It’s that pig level of commitment needed in small business and it’s the story we need to get across.

Over the last six years of a poor government 412,000 jobs were lost in small businesses across Australia – that’s 1320 a week, every week. Now because it wasn’t a big unionised shop where there was 300 in one instalment, it didn’t get a lot of attention. Because like our business, the one that we closed, the people relying on our enterprise for their livelihoods – well that was just one or two. Then it had an impact on the supply chain who saw us as their channel to market, but those job losses were sprinkled around, they weren’t in your face. It wasn’t as if it was a big mass number leaving one workplace – but it makes my story no less important.

I explained this to my officials and said imagine the entire population of Canberra and Queanbeyan losing their jobs – that’s how many people we’re talking about.

When the Howard Government was in power around 53 per cent of people were employed in small business. Today there is only 43 per cent and this troubles the Government and me greatly.

Because when the mining boom moves into a production phase people will wonder what is next. Then they will start realising there is a need for innovation, for creativity for nimbleness, for risk taking and entrepreneurship and then they will say, isn’t that what small business is about?

Well we understand that and that’s why we have gone about a change agenda. I am one of the 20 people running the country. I don’t sit at the kids table; I sit at the adults table. I’m not one of the revolving door ministers in the previous government; I’ve been doing this now for five years and am seriously committed to restoring confidence in the sector, boosting growth and driving innovation.

When Cabinet meets, usually each fortnight, to contemplate the direction and strategy of our nation’s policy settings, small business interests are embedded in that dialogue. They are unavoidable, I am not shy and the Prime Minister knows if I have a view he will hear it whether he wants to or not.

The OECD called me the other week and said they think what we are doing is world’s best practice for recognising small business as the engine room of the economy.

Treasury now carries the policy weight for small business. It used to be in the Department of Industry and they had a good go at it, but we know that no small business is like the next one. They are incredibly diverse and there is not one single industry plan that will be of benefit to small business.

It’s not like the mining industry or the car industry or the chemical industry, it’s not like that and that’s where the industry policy was at its best.

It is enterprising people working for and making their own the opportunities that are in the economy. We are working to get those broader economic settings right and are working with the tax system so it is more supportive.

We are following this through with the regulators by having small business expertise on the ACCC, on the Board of Taxation so that those agencies which have an enormous impact on your opportunity to succeed, have that situational awareness embedded in their work.

We are working to get rid of needless impediments out of the economy which is why we are so committed to getting rid of the carbon tax. The carbon tax punishes no one more than small business with most small businesses told to suck it up or pass it onto customers, at a time when the capacity to do either is modest.

But if you are an exporter you’ve got more weight in your effort to compete and secure work. Those orders from Australia as a production place now have the reverse tariff of a carbon tax whereas the competitors that want that opportunity, they don’t have it. How does that help our economy? How does that help our competitiveness? It doesn’t – it makes it harder.

The mining tax is also a waste. You know most continents in the world have what we offer? We need to compete and earn that investment dollar so that those opportunities come here. You don’t spook the horses by changing the rules halfway through. You don’t seek to improve the rest of the economy by punishing those that have got strength and momentum behind them.

It’s like Gary Ablett – you don’t lift the rest of the Suns performance by nobbling Gary. You try and take advantage of that strength, bring in other players, other sectors into that winning mode. This is why we want to get rid of the carbon and mining taxes.

There is a huge regulatory burden with 21,000 new and amended regulations introduced in six years under Labor. If you feel like you are plagued and gummed up by compliance obligations, it’s because you probably are. We want to take $1 billion out of the economy and the good news is we are $730 million into that effort so far.

On our first Red-Tape Repeal Day this year, we had more than 10,000 regulatory instruments repealed and we are looking for more, so if any of you who have red-tape or compliance obligations that serve no good purpose, let us know.

We have made efforts to repeal the paid parental leave pay clerk burden that was imposed by the previous government, which had no policy upside, but required businesses to change accounting systems and payroll systems and put them at risk of a fine they got it wrong.

We have made progress around the way superannuation can be distributed, so one cheque can go to the ATO instead of multiple cheques. We have also streamlined the way the personal properties securities register operates to ensure small business people can spend more time in their business, not doing the stuff that’s needlessly required.

We have gone someplace our opponents wouldn’t by inquiring into our competition laws which were created some 22 years ago. At that time Coles and Woolworths had a 40 per cent market share – they now have 80 per cent.

The risk of modern day serfdom is being a supplier to a supermarket chain. They will tell you what you can do, what margin you can make, what product development you should be involved in and they will shape your destiny enormously because you have nowhere else to go.

Our laws didn’t anticipate things being quite like this a generation ago. Section 46 of the misuse of market power provisions promised so much, only to see the courts read it down in its use and its utility. It’s nearly impossible to prove the misuse of market power and if it is proven, you are slapped with a wet lettuce leaf.

That’s why you see competition that isn’t based on merit, it’s based on muscle. This is why we need to revise this toolkit and make sure it is fit for purpose for today’s economy.

We are also looking at unfair contract terms and protections and will be releasing some changes to the law in that regard.

Moving onto dispute resolution, if you have a dispute with the government – where do you go? Where are the dispute resolution avenues that aren’t going to see you lose your house while you wait for your day in court, when the big party knows they are just going to starve you out? This is why we have the Small Business and Family Enterprise Ombudsman.

We are looking at streamlining procurement processes and have a suite of changes to the way the Commonwealth seeks the services that many small businesses are in a position to provide but because of those contracting arrangements, are overwhelmed by the complexity and scale of that requirement.

Now these are just some of the examples of where we are doing work. We are looking at franchising reform and have announced a package of reforms in that area.

A key part of my role is to remove red-tape so that the two million operating small businesses have the confidence and sense of opportunity to employ just one more person. What a transformation that could make, what inroads that could make into the 200,000 more unemployed people we are now working with than was the case when the Howard Government was in power.

Think about our budget situation – what a nightmare that is and how crucial it is for our economy to be operating at its best to create the wealth we need to generate the taxes to provide the works and services that our citizens expect.

Today there are five people in the workforce for every one retiree. By 2050 its three – that’s three people in the workforce for every retiree, working to generate the income we need to improve our living standards. Something made all the more difficult if we don’t fix the budget.

The budget today costs us $10 billion per year just to pay the interest. We are on a trajectory for debt of $667 billion unless something changes. I’ll make it easier for you, round it up to $700 billion – that is the number seven followed by eleven zero’s and that is the debt trajectory we are trying to get the nation off and get it back on track.

That’s not going to be fun and I’m not here tonight to tell you that we have oodles of money to spend because we don’t. What we do know is that we can’t see our way out of the quagmire of bad government that we’ve inherited and the debt and the deficit unless we can get the economy going.

We can’t provide the wealth we need to support the living standards that we expect as a nation for a growing retiree population with fewer people creating that wealth, unless we are at our very best. To do that we need small business and family enterprises demonstrating that entrepreneurship, growing opportunities for themselves and others and asking for nothing more than a fair chance at succeeding.

It’s been a tough few years under the previous government, we don’t have a magic wand to change that overnight but I am encouraged by the green shoots that are there. Our job is to get those obstacles out of the road, to remove the headwinds and to support a renaissance in enterprise because that is what our nation needs.

This is where my focus is and I will know my work is done when we have achieved our goal of making Australia the best place to start and grow a business.

As you can see, we have an ambitious agenda for energising growth in the wider economy, and revitalising the small business sector in the process.

We believe that growth will best be served by a shrinking government footprint, and having the right settings in place to foster investment, job creation, and expansion for Australia’s businesses.

They’re the ones, after all, that will drive growth and help deliver a prosperous future for all Australians.