14 steps

Energising enterprise

Emily Carter — Wed, 14 Aug 2024 05:50:59 +0000

Energising enterprise Emily Carter Wed, 08/14/2024 - 15:50

13 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Julie-anne Sprague.

Radio 6PR Perth

Subject: 14 Steps to energise enterprise

Julie-anne Sprague

There is a worrying trend and the �Թ�� and Family Enterprise Ombudsman, Bruce Billson, is sounding the alarm. He's concerned we are sleepwalking into a big corporate economy. Joining me to find out why and how. Bruce Billson himself, Bruce G'day.

Bruce Billson

Jules, fab to be with you and your listeners and how come Rush, rush from Paula Abdul is not on that list?

Julie-anne Sprague

That’s so good Bruce. We might do a best of three theme with songs that have the word twice in the title, and then we can get Paula Abdul.

Bruce Billson

I think you're onto something there, but what we’re not onto is great times for small and family businesses. There’s plenty of headwinds there right now, and I'm just trying to draw attention to just how challenging the circumstances are. But also some of the underlying trends and trajectory, which is why I'm concerned with sleepwalking into a big corporate economy.

Julie-anne Sprague

Let's talk about that. If people think about Australia and business, obviously big business operates, but a lot of people will think there's a lot of small businesses, a lot of family businesses, but that is starting to dwindle. Let's talk about how much it has changed over the decade. So, they represent around 33 per cent of the nation's GDP, Gross Domestic Product. But not so long ago, it represented an awful lot more.

Bruce Billson

Yeah, that's right. So, $1 in $3 generated in the economy we can thank a small business for, and that's worth celebrating. That's very important. That is a big deal. It's over half a trillion dollars. So yes, that is big, but it used to be 40 cents in the dollar, not 33, not so long ago in 2006. Even what livelihoods are powered by that economic contribution. We celebrate, as we should, two in every five private sector jobs being made possible by a small business. But that was over half in that same window back in 2006. I'm sort of just saying, look, this is a trajectory that's on. It concerns me because I see other things happening as well.

In the last full year of tax returns, 46 per cent of small businesses not making a profit. I see an aging small business owning community. The average age is now 50, was 45 back in 2006. But also, for young people. I mean there's only 8 per cent of business owners that are under the age of 30, whereas in the ‘70s, it was twice that.

So, something's going on and I'm just calling it out to say, hey, for people that aren't blessed with a big mine or a major employer in their community, the livelihoods that are made possible, we should be thanking small family and farming businesses for, and what can we do to best give them the best chance to be successful?

Julie-anne Sprague

A couple of points there you raise Bruce. If you're saying 46 per cent of small businesses did not make a profit, that says, to me, it's very, very difficult. And if you're a young person, honestly, why would you want to go and set it up if you're seeing that from a generation in front of you? So, what do we need to do as a country to make it at least an easier environment, so that they are able to be at least profitable?

Bruce Billson

We think we need to energise enterprise. We need to not just try, as we've been putting a lot of effort into, reducing new headwinds in the face of small businesspeople. What about putting some wind in their sails? What about celebrating that contribution we just spoke about? What about some incentives for people, particularly in those early years, when starting out a business is a very cash hungry thing to do. You might look like you're profitable on paper, but you've got money going out the door building up your capacity to deliver what you hope to deliver to your customers. So that's a real valley of death in terms of cash flow. We can do things in that space.

I think we also need to be more active in thinking about the regulatory impositions. It’s a big responsibility owning and running your own business. We want to make sure we're not making it so onerous that it's incredibly unattractive. And this is when we're thinking about new rules, new regulations, new compliance obligations. What's the right-sized answer, not what some big corporation could deal with where they got 20 people tucked away in a compliance area that gets out of bed every day doing that stuff. This is about the business of running the business and most enterprising men and women, that's not their jam. They didn't get into the business to lodge BAS returns. They got into the business because of some driving passion, some desire to delight their customers, some real area of great interest to them.

There's some of the things that we've outlined. In fact, we've outlined 14 steps that we think will help, and that's just some of them that we feel would really make the ecosystem as supportive as it can be.

Julie-anne Sprague

And the industrial relations system would feed into that if I'm thinking about regulation. So, there's your BAS statement. There's all the paperwork that goes with running a business, and it does feel to me, having a chat to business operators, that the burden has increased over time, and we need to look at that. But then you have an industrial relations system where you've got hard-working people, and I think by and by most of them want to do the right thing by their staff, but you have a system where the award rates are incredibly complicated. I feel like you need a university degree just to understand some basic awards. Do we need to simplify things Bruce?

Bruce Billson

We think we do. We've called that out as a particular challenge point for smaller employers. I mean, about 94 per cent of all the businesses that employ people are small businesses. But does anyone imagine that the workplace relations regime is actually built for them? It's not. It's built for big corporations, at the club of Industrial Relations lawyers, big unions, and they can navigate and play in that playground that they're familiar with.

If you and I, as enterprising men and women, want to build a business, we could possibly build a $10 million business, employ dozens of people, but still never be quite sure whether we've got the workplace relations arrangements right. Because we've seen some of the biggest, most sophisticated organisations in the country find themselves having made errors. And when we start talking about big consequences for getting compliance obligations wrong, that has a real chilling effect on people. They think, I'm not sure I've got this right, but gee, if I get it wrong, what's going to come down on me? Is it a ton of bricks, or is someone going to come along and help?

So, what we've argued for is let's have a dedicated �Թ�� Commissioner working within a dedicated �Թ�� Division at the Fair Work Commission so that the special circumstances of smaller employees is front of mind and what gets them out of bed every day. And if a small employer makes a misstep, that they get alongside that employer to support and help them to do the right thing, not have a real heavy compliance, and boy, are you going to be in strife sort of tone which isn't going to support adjustment and isn't going to support a proportionate approach. And we think there's a real opportunity to improve that aspect of it.

Julie-anne Sprague

And Bruce, just more broadly, Bob Gottliebsen, he wrote a piece for The Australian newspaper, a business commentator, well-respected, and he's making the point here that if we have a dwindling small business sector or family businesses that aren't thriving, that this makes the job of the Reserve Bank of Australia quite difficult. And so, the thesis being that it is in fact, small and family businesses that can keep a lid on prices. They are more nimble, they are more tuned to it. And big business can sometimes sit back and flex their muscle and say, well, we're big businesses, you're gonna have to pay this price. Has he got a point?

Bruce Billson

Yes, he has, and it’s a ripper piece that Rob's written about. He's drawn the connection between some of the things that we're talking about and some of the recommendations that we've put forward as positive action steps and steered it into one of the big challenges that we're facing right now, and that's the productivity challenge. I mean, if we can't be more productive and innovate and find new ways of delighting people, we then have these pressures in the economy. And a wage increase without productivity gains that go alongside it, is inflationary, and you end up having those sorts of challenges without the magic that sees innovation, new ways of doing things, better ways of operating from everything from the corner smash repair or through to someone running a digital tech platform. There's always better ways to delight the customer. Productivity is not, you know, go and invent Wi-Fi. It's little steps in the right direction that sees us being able to get more done and delivering more value for the effort and time we put in. And he's making the point that's so crucial, so crucial to trying to drive better outcomes for the economy, but also where small businesses are offering choice and innovation, whereas a big business can impose themselves on the economy, on their customers, and you can sometimes be too powerless to do something about it. So, it's a really good connection of a range of things. Some really big national challenges, with the day-to-day boots on the ground challenge that small and family and farming businesses are facing.

Julie-anne Sprague

There are some challenges indeed Bruce, and chief amongst them, I've got a rush, rush to the next story we’ve got.

Bruce Billson

Jules, it was great to be with you and your listeners.

Julie-anne Sprague

Thank you very much Bruce Billson, �Թ�� and Family Enterprise Ombudsman.

14 steps to energise enterprise

Emily Carter — Tue, 13 Aug 2024 04:32:29 +0000

14 steps to energise enterprise Emily Carter Tue, 08/13/2024 - 14:32

13 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Nadia Mitsopoulos.

ABC Radio WA

Subject: 14 Steps to energise enterprise, small business conditions, family business succession, lowering merchant fees on transactions, the high cost of insurance, tax discounts for small business

Nadia Mitsopoulos

There are 2.5 million small businesses in Australia. That actually makes up 98% of businesses in this country but they’re not contributing as much to the economy as they used to, and that's worrying Bruce Billson. Now he's the Australian �Թ�� and Family Enterprise Ombudsman, and he says we are sleepwalking into a big corporate economy. And he's with me now. Good morning. Mr. Billson.

Bruce Billson

Oh, Mr. Billson, that sounds like my dad. How are you, Nadia?

Nadia Mitsopoulos

I’ll call you Bruce, then. Now, Bruce, first of all, what contribution do small businesses make to the economy?

Bruce Billson

Well, it's really significant. And all of us, I think even yourself and many of your listeners, celebrated International Micro, Small and Medium Enterprise Day just a few weeks ago, and we were highlighting that a third of Gross Domestic Product, all the things that we produce in Australia, are made possible by small businesses. And two in five of the jobs in the private sector workforce are made possible by small business. So that's 5.36 million people counting on their livelihoods through small and family business effort. That's great. But what I was calling out was just a few years back in 2006 that third of Gross Domestic Product was actually 40%. That two in five jobs was actually more than two in four.

So there's this gradual decline, and that trajectory, I think, is quite worrying when we think about how are we going to generate productivity, new livelihood opportunities, innovation, and create the wealth and good fortune that the nation looks to and that small and family businesses are such a part of making possible.

Nadia Mitsopoulos

Why are we seeing that decline? What's the problem?

Bruce Billson

Well, we've got a few ideas around why that might be. Obviously, the pandemic has had quite an impact. The economists will point to, after a dislocation in the economy of that size the larger firms tend to do better. They've got deeper pockets, they've got avenues to raise funding, they've got capacities that are a small and family business that's flat out trying to deal with the headwinds doesn't have available to it. So that's part of it. The other thing too is we think there's a real need to focus on just how complicated governments at all levels are making owning and running a business. It's a big responsibility. We know that, and I know you know that, Nadia, and so do your listeners. But we don't need to make it harder than it needs to be and then really put in the road barriers and obstacles to enterprising men and women going their own way and creating their own business opportunities for themselves and others.

Nadia Mitsopoulos

So, you’ve got rising costs, and you've got rising red tape.

Bruce Billson

Yeah, it is. And at a time when cost-of-living pressures, which are rightly very much front of mind, they are cost of doing business pressures in small and family businesses. So, they're getting cost pressures coming through. The payroll’s going up. Super contributions are up. Rents are up. Energy costs are making their eyes water, and, frankly, insurance costs, they're ballistic at the moment. And all of those things and other inputs combined to make cost pressures very real in too many businesses at a time when they just can't pass them on to customers, because those households are really being careful about where their dollar is being applied. And that's really creating a margin squeeze.

And in the last full year of tax data, 46% of small businesses weren't making a profit. So, this is a really challenging time, and that's why I'm urging people in a position to do things about it, to actually do something. And why we’ve mapped out 14 steps that could be actioned pretty quickly.

Nadia Mitsopoulos

And I want to go to some of those steps in a moment. But can you just explain your comments that we are sleepwalking into a big corporate economy. What do you mean by that?

Bruce Billson

Well, that's that trajectory. When you look at the contribution made to our economy by small businesses that's contracting, and for larger business, it's growing. We look at that contribution to employment, the same thing is happening. There are fewer employing small businesses, employing a smaller proportion of the private sector workforce. Even when you look at longer term trends over profitability, if you're lucky enough to be a small business that's profitable, those profit growth year-on-year are at about 3%, so that's below inflation, whereas for larger corporates, it's 13%. So, you're seeing that dominant market position that larger businesses have being able to attract new ways of generating, for them, profitable activity at a time when small businesses are often receiving into that and with few choices.

The other thing we need to watch too is, you know, I'm all for celebrating people over 50. I'm one of those, Nadia, I confess. But the average age of a business owner right now is 50. Now that aging of the small and family business ownership population, that's something we should be turning our minds to as well. There's only 8% of current small business owners under the age of 30, yet in the ‘70s, it was 17%. So something's there, something's going on. And I think we just need to make that entrepreneurial pathway for people's lives more attractive.

Nadia Mitsopoulos

Or is it succession issues that the kids don't want to take over the family business?

Bruce Billson

Look, there's a bit of that. I mean, I travel around the country a lot. I was joyful in being in Perth just a few weeks ago. And you meet business owners, and particularly family businesses, where, you would think, in their gene pool that they'd be ready and ripe to take over the business. But I occasionally hear some saying, ‘I’ve looked at how hard mum and dad are working. I don't know what I want to do with my life when I grow up, but I know that's not it.’ There's a bit of that there too.

But the flip side is, particularly for people born overseas, a disproportionate share of business are owned and led by people born overseas. Perhaps that spirit that sees people migrate to a new country is part of the drive that sees many of that community become our business owners and leaders.

Nadia Mitsopoulos

Bruce Billson is my guest this morning. He's the Australian �Թ�� and Family Enterprise Ombudsman. A lot of you want to talk about this. I'm going to get to your calls in just a couple of minutes. So just some of the points and the kind of assistance that you suggest small businesses could have. First of all, can fees on card transactions, debit cards, credit card transactions, be reduced?

Bruce Billson

Yes, they can. And boy, shouldn't they do that right now. I mean, we think there's around $800 million to $1 billion of unnecessary fees being charged just so customers can pay for their goods and services at the checkout. Now that happens when you walk up to an EFTPOS machine, a payment terminal. You are time-poor, the staff behind the counter might have a long line of people to serve, you wave the card and you're out the door. Now what automatically happens in too many cases, is that payment is routed down a more expensive channel than it needs to be. That's usually one of those international cards where their fees are much higher than, say, a local EFTPOS option where the fees should be less.

Now the technology is there to actually have the device when you're paying, pick the most cost-effective channel, so that the fees are as low as they can be. But that device functionality isn't activated in about half of the small business merchants that our banks claim to be wanting to look after. So, we're saying, get on your bike and activate that functionality. That's good for the business, but it's also good for the customers, many of whom are a bit tired of seeing those little surcharge signs popping up everywhere.

Nadia Mitsopoulos

We sure are tired of it. What about tax discounts? What could be done there?

Bruce Billson

In other countries, such as Singapore, they recognise those early years of a small business can be, you know, the valley of death in cash flow. You got a lot of money going out the door to set up and scale up that business. And not always is the revenue coming in at the pace that you need it. So, in countries like Singapore, they actually say we'll discount the tax that you're expected to pay so that you can reinvest that money back into the business. Now it does a couple of things, Nadia. It helps those businesses with a flame of success within reach during a period of time where the journey is challenging to get through that time.

But it also makes a big statement that these people matter. They're important to our economic and societal well-being. Here's a clear, bold statement that we value that and we're going to incentivise that behaviour by the discount.

Nadia Mitsopoulos

You want discounts on insurance as well. You made the point earlier that insurance is really crippling for a lot of small business.

Bruce Billson

Look, it's terrible, and it's an unavoidable cost. Because unlike consumers who might make you know the decision for whatever reason to under insure, perhaps not insure, if they're brave or some other arrangement. Most businesses don't have that option. If you want to engage in trade and commerce, there are essential insurances you have to have. Yet we see the price of those skyrocketing. Now I respect and I admire the insurance industry for explaining why they're going up. That's fine. There's been a lot of explaining going on. What I'm calling for is a decisive action on what solutions look like. Start mapping out a better scenario so that small and family businesses just don't sit there paying through the nose in the hope that something will get better sometime soon.

Nadia Mitsopoulos

Gosh, there are so many people that want to talk about this. I'm going to get to calls. Bruce Billson before I let you go, finally, the other one that I found interesting is you want small businesses to have a greater chance of competing for government contracts, because you say that a lot of those government contracts favour the ‘in-crowd’ of familiar, established, larger suppliers.

Bruce Billson

Yeah, we did a lot of work on this Nadia. In fact, successive governments asked me to do some work on how to make the Commonwealth procurement processes more small business friendly. We asked a lot of small businesses, and they said, Look, you need to be really part of that ‘in-crowd’, knowing who to talk to, when things might appear on an obscure website, knowing how to make a bid, so that you can be part of that contest to win that work. Because who wouldn't like the government to be a key customer? That can be really game changing for a small business, but the rules are so darn hard. It's so complicated. Often those rules aren't even well understood by procurement officials, and we said, let's decode them so that commercially minded people can engage in that opportunity. That's good value for the taxpayer. You've got good, healthy competition. You're getting better outcomes for the nation.

Nadia Mitsopoulos

Well, you've sparked quite a conversation, Bruce Billson. I'm going to get to calls. Good to talk to you.

Bruce Billson

Fab to be with you, and best wishes to your listeners. Nadia.

Nadia Mitsopoulos

Bruce Billson, there. He is the Australian �Թ�� and Family Enterprise Ombudsman. And boy, you want to talk about this on ABC Radio Perth and WA.

Small biz needs all the help it can get

Olivia Pearce — Fri, 09 Aug 2024 02:21:47 +0000

Small biz needs all the help it can get Olivia Pearce Fri, 08/09/2024 - 12:21

08 August 2024

Opinion piece by the Ombudsman Bruce Billson.

Originally published in the Daily Telegraph.

Small business is a big deal. But not as big as it used to be. Economic contribution has dropped from 40 per cent to 33 per cent since 2006 and share of private sector jobs at 42 per cent, down from over half. We are sleepwalking towards a big corporate economy.

At the same time, insolvencies are at a record high. The Tax office, hot in pursuit of tax debt, reports that 46 per cent of small businesses aren’t making a profit. That’s why I’ve proposed 14 steps to energise enterprise. More incentives for those starting out, better access to justice when wronged and more emphasis on encouraging younger Australians to consider business ownership.

Let’s end the hidden tap-and go charges costing small business – and consumers - up to $1 billion. The big four banks still have to turn on the cheaper system for more than half their merchants. Small firms are too often left stranded by digital providers such as Facebook or Instagram.

Big tech needs real dispute resolution process (or a real person) to deal with disputes to avoid the run around of being told to log into your account to say you can’t after being hacked! How about a tax discount or offset for new small businesses to improve cash flow in the early ‘valley of death’ years? Nine out of 10 businesses who employ someone are small yet the rules are complex and onerous.

A dedicated small business fair work commissioner and rules could address this. Red tape grows in number and complexity. We need right-sized regulation and support that tells small business exactly what is expected. Cabinet submissions should include a small business impact statement so every time a decision is made, small business would be front of mind. Small business needs unfair business practices protections, solutions for the wicked challenge of insurance, a real opportunity to compete for government contracts and greater digital support and ease of access to get help.

The average business owner is now 50 and only 8 per cent are under the age of 30, half what it was in the 1970s. It is in our national interest to create a more supportive ecosystem to give enterprising people the best chance to be successful.

14 steps to stop small business's alarming downward spiral

Olivia Pearce — Fri, 09 Aug 2024 02:16:27 +0000

14 steps to stop small business's alarming downward spiral Olivia Pearce Fri, 08/09/2024 - 12:16

08 August 2024

Opinion piece by the Ombudsman Bruce Billson.

Originally published in the Canberra Times.

I fear we are sleepwalking into a "big corporate" economy.

Many small and family businesses are doing it tough right now and the post-COVID environment is, in many cases, even more difficult.

Small businesses are grappling with rising input costs, notably wages, fuel, gas, electricity, insurance and rent. And there continues to be ongoing shortages of talent and skills with lower rates of productivity putting upward pressure on labour costs.

The Tax Office has resumed its "lodge and pay" enforcement approach and those who had rent relief have found the landlord now wants to be paid. Then there is the whammy of 13 rises in interest rates by the Reserve Bank over the past two years still having an impact on the costs of financing and on customers' spending, preferences and confidence.

It's no surprise that corporate insolvencies have reached a record high and there's been a 50 per cent increase in calls to my office from small businesses worried a supplier might be insolvent or their own business might be heading that way.

There is also a growing number of increasingly complicated regulations such as a new definition of casual employment and provisions for converting to permanency; mandatory country-of-origin labelling for seafood in hospitality venues; and the prospective removal of the small-business exemption from the Privacy Act.

Together, it is taking a toll on time-poor and resource-constrained small business owners.

The ASBFEO �Թ�� Pulse, which is a "health check" of objective vital signs for the small business sector while also taking into account the "animal spirits" that drive decision making by the enterprising Australians, shows that post-COVID the business environment for small business is 25 per cent below the long-term average.

We need more incentives for those starting a small business, a simple, quick and cost-effective way for small business owners to settle court disputes, and more emphasis on encouraging younger Australians to consider business ownership.

After widespread consultation and investigation, my agency is outlining 14 steps designed to give more support to the nation's 2.5 million small businesses and calling on the parliament, policymakers and regulators to:

Explore the potential benefits of a tax discount/offset scheme for new small business owners to allow them to keep more of their income to re-invest in their business during the critical first three years.
Focus on right-sized regulation, including how regulators and government formulate and administer laws, to help, support and enable small business owners, who do not have the resources of big business, meet their obligations.
Require every cabinet submission, preliminary and formal regulatory impact statement and new policy proposal to include a small business impact statement.
Establish the Prime Minister's �Թ�� Awards to recognise and celebrate excellence and inspire the next generation.
Give small businesses an affordable, effective and timely alternative to defend their own economic interest where fair trading protections and reasonable commercial conduct safeguards are infringed upon by creating a Federal �Թ�� and Codes List in the Federal Circuit and Family Court of Australia.
Give small business a greater chance to compete for government contracts by decoding the rules and practices that favour the 'in-crowd' of familiar, established and larger suppliers.
Make it mandatory for banks and other providers to charge the lowest fee for tap-and-go, dual-network debit card transactions as the default, saving small business around $1 billion a year.
Undertake urgent and decisive action to ensure that essential insurances for small businesses are understandable, accessible and affordable.
Ban unfair trading/business practices that distort competition and harm small business.
Create a dedicated �Թ�� Commissioner and Division within the Fair Work Commission.
Require digital platform providers to implement clear, appropriate and standardised procedures for timely small business dispute resolution.
Honour businesses who fulfil their workplace obligations to employees, meet tax reporting and payment obligations in a timely way and pay small business suppliers in under 21 days, with a 'Good Business Pays' recognition and accreditation.
Expand digital learning and practical support through business system and reg-tech solutions, information management and practical Artificial Intelligence uses.
Develop a readily accessible and easily navigable central resource hub of actionable information, 'how to' guidance, programs and assistance developed by government and private sector specifically prepared for small business use.

There's more detail on our website asbfeo.gov.au

We need to create and nurture the spark that will inspire someone to turn an idea into investment, to build a business, to take on the risk and big responsibility of creating an opportunity-generating new enterprise, and to employ that extra person.

Small business is rightly celebrated for generating 33 per cent of our nation's gross domestic product and providing jobs for 42 per cent of the private workforce. But in 2006, small business contributed 40 per cent of GDP and employed 53 per cent of those with a private sector job. This is a worrying trajectory.

It is not enough to dedicate enormous time to just mitigating the wind in the face of our small and family businesses. These steps can provide greater support and some much needed wind in their sails.

Bruce Billson is Australian �Թ�� and Family Enterprise Ombudsman

Future Made in Australia

Emily Carter — Fri, 09 Aug 2024 01:25:43 +0000

Future Made in Australia Emily Carter Fri, 08/09/2024 - 11:25

08 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Ross Greenwood.

Sky News Business Now

Subject: 14 Steps to energise enterprise, small business and Future Made in Australia

Ross Greenwood

Perhaps the real Future Made in Australia is already here, but it's battling. That’s the hundreds of thousands of small business owners who flog their guts out each and every day and employ more people than any other sector, in many cases, for little or no reward.

�Թ�� and Family Enterprise Ombudsman Bruce Billson, a former �Թ�� Minister in the Coalition government, has put out a 14-step plan to try and make life easier and hopefully a bit more profitable for small business operators. The man whose slogan is to energise enterprise, Bruce Billson is with me now in our Canberra studio. Bruce, many thanks for your time as always.

Is that the reality that the Future Made in Australia policy almost smacks small business owners who actually are here for now, and for the future, in the face by subsidising others who might be important, but no more important or less important than small business operators?

Bruce Billson

Well, for a Future Made in Australia you need businesses made in Australia. And the engine room of our economy are those small and family businesses, Ross. And for those subsidy programs and production incentives, they're very much out of reach for smaller firms. And what we're saying is that there is this entrepreneurial ambition amongst Australians. Give them the best chance to succeed, support their enterprise formation and really put wind in the sails of those businesses that will drive innovation, growth and opportunity, because right now, they're feeling more headwinds than they are feeling winds in their sails.

Ross Greenwood

Okay. The reality is they have to cope with higher interest rates. That slackening consumer demand hurts every one of them. The fact that rents have gone through the roof, the fact that now the Tax Office is chasing them for debts that might have been accumulated during COVID. All of these things conspire to make life more difficult, and you can see that in the bankruptcy figures with more insolvency of business than ever before in recent times.

Bruce Billson

And that’s right. Let's appreciate and respect that there is enormous pressure on households. Cost-of-living pressure is real, and it's affecting people's purchasing choices. But those pressures are business input pressures for small and family businesses, all further squeezing already wafer-thin margins and impacting on consumer spending. And we know there's no substitute for customers, Ross, when you're running a business. And so, this is a real area of challenge. And we looked at the last stats coming out of the Tax Office, you've got 46 per cent of small businesses not making a profit. For those million and a half Australians for whom self-employment, independent contracting, is their full-time livelihood, three-quarters nearly are taking home less than average total weekly wages.

So, the rivers are gold and not there. There is still that drive to be your own business, make your own opportunities, pursue your own livelihood, but no one would think the financial returns are spectacular.

At the same time, we've got growing complexity and volume of regulation and some real challenges about small and family businesses, wondering, well, who's the next generation? Ross, sadly, the average business owner now is 50 years old. The number that are under 30 are 8 per cent whereas it was 17 per cent in the ‘70s. We really need to bring forward that next generation. We need to have people with entrepreneurial ambitions to feel optimistic and supported that going into business and creating opportunities for their community and others is something that's really valued, and we're doing what we can to give them the best prospects of success.

Ross Greenwood

So as the Ombudsman, you step in when there are issues that are really discriminating against those small and family businesses. What are the key factors that are in front of you right now?

Bruce Billson

We've got some real pressure on our assistance cases. As many of your audience would know, where there's business disputes going to court to sort them out for a small business is no option at all. So, we get involved in trying to facilitate resolutions and where there are industry codes, where there's obvious and inherent power imbalances we have a role there too.

But still the largest proportion of our cases are around payment disputes. Really pointing to that cash flow challenge of people who need to pay small and family businesses, that because of the delay in payments, then causing cash flow challenges for those businesses. So that's a biggie.

The other fastest growing is digital platforms. Ross, you many enterprising men and women, their whole relationship with their customers is through these platforms. But heck, if your account’s hacked on Facebook or something like that, and you're told, hey, log into your account to tell us that your account is locked, you can imagine how infuriating that is, and we're trying to make sure that channel to market is one that's supportive as well.

Ross Greenwood

Bruce Billson always good to have on the program, and many thanks for your time today.

Bruce Billson

Thanks for your interest Ross.

Let's boost small and family businesses

Emily Carter — Thu, 08 Aug 2024 23:42:26 +0000

Let's boost small and family businesses Emily Carter Fri, 08/09/2024 - 09:42

08 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

Radio 2CC Canberra

Subject: 14 Steps to energise enterprise to boost small and family businesses

Leon Delaney

The Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, has expressed his concerns that Australia may be sleepwalking into a big corporate economy at the expense of the viability of small and family enterprise businesses. Bruce, thanks for joining us today.

Bruce Billson

Leon, great to be with you and your listeners.

Leon Delaney

Why are we sleepwalking into a big corporate economy?

Bruce Billson

Well, the trajectory of the economy points to that as being the path we're on. And I'm trying to call that out to say, well, let's think about whether this is what we desire or not. I'm a great believer in small business being the engine room of the Australian economy, a great generator of innovation, wealth, employment, opportunity and prosperity. But essentially, according to the research we've done, if that engine is a four-cylinder engine, we've lost a cylinder.

And we're also looking at a growth in the proportion of the economy that the big corporates control, a reduction for small business in the contribution to GDP. It's about a third of all economic activity in the economy now. It used to be a bit over 40% just in 2006. And even in employment terms, right now, two in every five private sector jobs is made possible by a small or family business employer. That's great, that's worth celebrating. But that used to be half of all private sector jobs were made possible.

So, I'm just calling that out, saying, if we want a future made in Australia, we need enterprises made in Australia, and that means really energising enterprise, supporting small and family businesses, and encouraging more people to think about their own business as a path for their livelihood.

Leon Delaney

Now this week we've seen insolvency figures and Insolvency Australia yesterday, in the statement they made, were referring to chaos and turbulence continuing. I mean, that's pretty powerful language, isn't it?

Bruce Billson

Well, it is, and we are at record highs in terms of numbers of insolvency, but worth bearing in mind, in terms of a proportion of all operating businesses, we're not at that all time high. We're about a bit over 0.3% at the moment. About 0.5% was the high-water mark. So, my concern is there's still more to come, I would imagine. And we know the Tax Office is up and about really working hard and sharpening its effort on pursuing outstanding Superannuation Guarantee contributions or tax debts more generally. We also learned from the last full year of tax data that's available, 46% of small businesses weren't profitable. And of the 1.5 million Australians that are self-employed, independent contractors, for whom that livelihood is their full-time endeavour, three-quarters are taking home less than average weekly wages. So, there's no rivers of gold here.

And we know, and you've talked about it a lot with your audience, about cost-of-living pressures. Well, they’re cost-of-business pressures for small and family business, and they're hurting. They are impacting on customer spending, and we know there's no business success without customers.

Leon Delaney

There's a lot of pressure on the economy at the moment, it's pretty much flatlining. All of the data tells us that the economy is very fragile right now and is at imminent risk of being pushed into recession if some miracle doesn't occur. It's clear that the operating conditions for businesses big and small have been very challenging. But the more challenging the conditions, the more difficult it becomes, particularly for smaller businesses, because the bigger companies have a certain degree of protection from their sheer size, don't they?

Bruce Billson

That’s right and scale and market dominance brings its own bumper rails. It's something that, you know, we can talk about this another time, but we've gone through COVID, the research points to larger businesses tending to recover better after times of great turbulence, because they've got deeper balance sheets, they've got scale, they've got funding options. They've got avenues of support.

You might lose a bit of value in your share market price. For small business they might lose their home, Leon. So, these are really substantial challenges. We know that half of all small business lending is secured by a private home. We also know the average age of a small business owner is now 50. So there's an aging profile there, and we're not generating enough excitement and appetite amongst young people and midlife people to think about their own business as an option.

It still brings many delights, and that's why so many people still seek their own and guide their own business. But we need to make sure that the ecosystem within which they operate is as supportive as it can be, so that they can be successful, and that's why I've released these 14 steps to energise enterprise.

Leon, these are practical, actionable information that I'm inviting our leaders, our policy makers, our decision makers, to pick up and do something with so that we can improve. Maybe reduce the headwinds that are in the face of small and family business owners and put a bit of wind in their sails.

Leon Delaney

Now, I'm sure we're not going to be able to reel off a list of 14 steps, but …

Bruce Billson

Go on. Of course we can, Leon. That'll be gripping listening for your audience.

Leon Delaney

One-minute and 47 seconds left, Bruce. What are the key proposals?

Bruce Billson

Well, there's a couple of things. One is we think the regulatory burden in its scale and its complexity is increasing and the difficult economic climate sees the risks maybe growing, whereas the rewards aren't.

And we think that balance needs to be adjusted, put some incentives back into it by having a tax offset or a discount, for those early years of a new business where it's the valley of death of cash flow. Having a real, passionate, commitment to right size regulation and not overwhelming small and family businesses with compliance tasks.

But a big one for me is let's have every Cabinet submission, every major decision by governments, include a small business impact statement so that those concerns are front of mind, bright on the radar screen.

They're just some of them. There's a number of more of them. I'd invite your audience that's interested to jump on our website, asbfeo.gov.au they're out there in the public domain. I'm inviting anybody who's as concerned about it as I am to embrace these ideas and do something about it.

Leon Delaney

Number 9 - ban unfair trading/business practices that distort competition and harm small business. Anything that's unfair and distorting competition, surely that's already outside the rules, isn't it?

Bruce Billson

No, it's not. We've got a huge gap in our competition laws, quite different from economies that are like ours. In our laws, you might have an unfair contract term. So, that's the ink on a contract might be unfair. And then the next area where unfairness plays out is unconscionable conduct, and there's a very high bar. In between it is a lot of overly sharp business practices where businesses are weaponising their strong market position to cause harm, not only to small businesses, but potentially customers.

These are like renewals of subscriptions, where you've got to be at 4:27, on a glorious Canberra day, and have a left-handed person say you don't want to renew in the next 30 seconds, otherwise it's deemed to roll over for another 12 months. I mean, those sorts of things are ridiculous, just as it is when you're dealing with some of the major corporates and they're saying, here's the price we'll accept, and the small business has got no choice. They've invested, they've got no other customers, they're dependent on those firms. And sometimes that behaviour is beyond shabby, and we've got a big gap in our law, in how we deal with it.

Leon Delaney

Bruce, thanks for your time today.

Bruce Billson

Good to be with you. Leon.

Making the ecosystem more supportive for small business

Emily Carter — Thu, 08 Aug 2024 00:05:01 +0000

Making the ecosystem more supportive for small business Emily Carter Thu, 08/08/2024 - 10:05

08 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Lisa Millar.

ABC News Breakfast

Subject: 14 Steps to energise enterprise, tap-and-go merchant fees, digital platform disputes, small business owners getting older, regulatory burden on small business, making the ecosystem more supportive for small business

Lisa Millar

Many of us are aware of fees on the tap-and-go at the checkout or the train station but how many Australians know that retailers and service providers also take a hit? That's among a growing area of concerns for the nation's �Թ�� Ombudsman, who's published a list of measures he'd like to see tackled. Ombudsman Bruce Billson joins us now from Canberra. Bruce, good morning. Welcome to the program.

Bruce Billson

Lisa fab to be with you and your audience and how good are the Olympians! There's also a group of Australians that need their personal best every day and, in some cases, needing to be world class every day. And that's the women and men owning and leading small business. So that's what gets me out of bed.

Lisa Millar

Well, how do you want to try and get them some gold medals because you’re really worried about this tap-and-go cost and I'm curious about that because I'm not sure a lot of viewers would realise how much of a hit they're taking. Talk us through it.

Bruce Billson

It's one of 14 really practical measures that we're encouraging our leaders and our policymakers to embrace to improve the ecosystem for small and family businesses. This tap-and-go arrangement, it incurs higher fees where people's transactions are routed through those international cards when there are cheaper options available. We think there's about $800 million to $1 billion worth of savings there, and small businesses needs that help right now. It's a needless additional cost impost.

The cost-of-living pressure we rightly turn our mind to, are business cost input pressures on small and family businesses who are really doing it tough right now, and that's a practical step that will give just a little bit of breathing space as they tackle a really challenging time.

Lisa Millar

So, what are you saying, the credit card companies should wear the cost and not be passing that on to the small businesses?

Bruce Billson

Well, most of our banks have their relationship with their merchants. Those EFTPOS machines have the capacity to switch to a lesser cost option. Only half of those machines have been activated to do so. So, the big banks really need to lead on this front. Merchants, small businesses, need to be aware of the impact, and also for consumers that don't want to pay surcharges and the like, let's go with the cheaper option. That's one of a number of ways we can reduce those input cost pressures that are adding to a really challenging time for small business owners.

Lisa Millar

You know what? Something else that jumped out at me in the figures that you've been looking at is the number of people who've been employed by small businesses, and how much that's changed over the years.

Bruce Billson

It's a worrying trajectory and I'm calling it out because I think we really need to turn our minds to it. We are sleepwalking into a big corporate economy, where complexity in the economy, challenges that are faced, they might be fine for a big corporate that's got dozens of people in the back room doing the business of the business, but it's tough for small business.

Right now, we celebrate the one-third of Gross Domestic Product that's generated in our economy by small and family businesses, and the two-in-five jobs that are made possible by these small employers. But just less than 20 years ago, it wasn't one-third of the economy, it was 40 per cent were being driven by small business. And it wasn't two-in-five jobs, half of private sector job numbers was being enabled by a small business. They’re also known to be the ones driving training. It's where innovation comes from. We really need to make the ecosystem more supportive for those small businesses.

Lisa Millar

And the other red flag about that, of course, is that small business owners, the average age, is getting older. So, you look at the figures and the lower profits, and you'd ask a young person, why would they bother starting a small business?

Bruce Billson

And you're right on the money. We think the risk-reward balance has got a little bit out of whack. The regulatory burden is growing. The complexity and consequences is getting more profound. And for people that go into a business, the jam - what motivates them - is not the business of running the business. So, let's not make that so hard that the reason that motivates people to get into business is overwhelmed by these other burdens.

Our research and the Tax Office figures show that 46 per cent of businesses in the last full year where records are available weren't making a profit. For those million and a half people that are self-employed, three-quarters of those, whose full-time livelihood is their self-employment, are taking home less than average weekly earnings. And the average age is 50. We've got about 8 per cent, Lisa, that are under the age of 30. It was 17 per cent in the ‘70s.

So, we really think you need to energise enterprise. There's much joy to be found in leading and owning your own business, but the business of running the business is becoming so much more of a big challenge and a big responsibility.

Lisa Millar

Hey, Bruce, just before you go, there's another point that I think we really need to make, and that's about the social media that a lot of these small businesses rely on, whether it's Facebook or Instagram or all the rest of it. But when there's a problem, if they've been hacked, they've got nowhere to go, they can't get the help they need. What do you want to see happen?

Bruce Billson

Well, we want the big tech companies to step up. You can imagine if yours and my business was reliant on social media and those e-commerce channels as the only way we could contact our customers. We're hacked, we can't get into our account. Can you imagine how frustrating it is that the advice from those big tech firms is, can you please log into your account to tell us you can't log into your account? I mean, come on, to quote John McEnroe, you can't be serious. That is something that's got to change. We think those dispute resolution processes need to be improved. How about having a real person to talk to? Otherwise, come to my agency, and we've been working hard to get outcomes, to get business back to business.

Lisa Millar

A real person to talk to. What a novel idea. Ombudsman, Bruce Billson, great to talk to you this morning. Thanks for coming on the show.

Bruce Billson

Thanks for your interest, Lisa.