Driving innovation needs an innovative approach

Australians are enterprising by nature – they want to innovate, and turn their ideas into reality, writes Kelly O'Dwyer.

That is a great thing, and now with the government’s innovation agenda, every entrepreneur, every small business and every Australian has the incentive and support to have a go and make their aspirations come true.

There are now more than two million small businesses in Australia, making up around 97 per cent of all businesses. Every one of those Australian small businesses tells a story of courage, risk and hard work; of struggle and success. I know this directly when I speak with so many hard-working Australians who are out there having a go.

Small businesses frequently raise with me the need for strong competition policy. At the heart of this is the need to have an effective misuse of market power provision.

The Harper Review found that the current provision of the Consumer and Competition Act wasn’t fit for purpose and recommended that it be strengthened to prohibit anti-competitive conduct.

After a thorough consultation process, the Turnbull government announced it would accept the recommendations.

The changes that the government has announced will more effectively focus on the long-term interests of both small businesses and consumers, improving the law’s clarity, effectiveness and force.

Protecting the competitive process is good for business, good for consumers and, importantly, good for increased economic activity and jobs.

This is just one of the many actions the government is taking to support small businesses. For instance, we’ve cut taxes and red tape for all small businesses.

We’re encouraging expansion and innovation by helping to open up new overseas markets, new ideas and new sources of funding.

We’re giving small business a strong advocate with real powers, with the appointment of the first small business and family enterprise ombudsman, Ms Kate Carnell. As someone who has run a small business herself, she has a strong understanding of the issues that people face in small business and the many opportunities open to small business.

For our economy to be strong, small business needs to be strong. The coalition has been creating the right economic settings for small businesses to thrive.

The $5.5 billion Jobs and Small Business package helps small businesses to invest more, grow more, and employ more people. Our small business restructure rollover measure has recently passed through Parliament, which makes it easier for small businesses to change their legal structure without incurring capital gains tax.

We want small businesses to have the agility they need to innovate and grow without getting weighed down by regulation and compliance costs.

We have recently made it easier and cheaper to run an employee share scheme, and improved the tax incentives. These changes make Australia more competitive internationally and help innovative firms attract high-quality employees in the international labour market.

Providing opportunities for employees to own shares in the companies they work for, not only aligns the interests of employees and employers but is also an effective way to improve company performance and productivity.

One of the biggest challenges for a small business, especially a new one, is access to finance. We are regularly monitoring developments in finance access and engaging closely with banks and other lenders on business financing conditions.

We want small business to have access to the funds they need to get their idea off the ground, or to expand their business.

At the moment, average interest rates on small business loans are lower than at any time in at least two decades. While small businesses have generally been cautious to take on new debt over recent years, growth in bank credit to small business has picked up recently.

At the same time, the alternative finance and marketplace lending segment has grown rapidly, opening up new funding sources for small businesses wishing to expand and capitalise on their ideas.

In light of this, the government is working to expand the range of financing options for innovative businesses. That includes introducing concessional tax treatment for investments in innovative start-ups and early-stage businesses, and has introduced into parliament Australia’s first platform and development of a crowdsourced equity funding (CSEF) market.

Crowdfunding allows entrepreneurs to raise funds online from a large number of people. It has already taken off in a number of other countries around the world, providing ordinary investors with an opportunity to share the risks and returns of these businesses. Compared with traditional equity fundraising, CSEF is a faster and cheaper way to obtain the required funding entrepreneurs need.

Once the legislation has passed, it will be exciting to see the bright ideas that grow from this new market. There is no doubt that innovation and transformation are the keys to prosperity. We are doing everything possible to help our economy invite and embrace innovation. That includes small business, which already represents 85 per cent of the business innovators in Australia.

The Turnbull government is focused on fostering a culture of enterprise, unleashing the dynamism of our small business sector – turning their aspirations into a reality and helping Australians to prosper while at the same time growing our economy.

Kelly O'Dwyer is the federal minister for small business and assistant treasurer.

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