The Australian government needs to do more to create a prosperous environment for SMEs and stimulate productivity, the ombudsman has urged, and use the US as a model for how to do so.
Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), said that Australia should take inspiration and reproduce some of the policies in place in the US aimed at encouraging small business productivity.
Speaking on the sidelines of the IPA Deakin Small Business: Big Vision conference in Melbourne this week, Ms Carnell said that while small business has been at the front and centre of US policy for over 50 years through the Small Business Administration (SBA), Australia is still struggling to prioritise the sector.
“They understood that you need to create an environment for small business with some support mechanisms a very long time ago,” she said.
“And it’s something that Australia needs to do. While we’re starting to realise that, we’re still a mile off to the game.”
Consequently, despite the government’s recent efforts to bridge the funding gap, access to capital or a lack thereof still remains a major issue for small business in Australia.
Commenting on the establishment of the $2 billion securitisation fund, Ms Carnell judged that despite being long overdue, it alone cannot fix the problem.
“The UK did it in 2011, Canada did it a couple of years ago, the SBA did it 50 years ago. There is a chunk of similar funds in the EU,” she said.
“But Australia hasn’t. I suppose we’ve managed growth and a whole range of good things without this, but it’s getting tougher.”
Government procurement in big firm pockets
Ms Carnell suggested that the government should imitate the US in awarding more contracts to smaller businesses.
While the US government is obliged to grant contracts under $10 million to an SME, in Australia government procurement to small business doesn’t extend beyond “paperclips and sandwiches”, Ms Carnell said.
“The Australian government has an annual procurement budget of about $11 billion, that’s a lot. That’s without defence or any of those spaces, but we just don’t do it.”
Acknowledging Ms Carnell’s argument, Assistant Treasurer Michael Sukkar said that although there is an attractiveness to it, “I would have to look at it much more closely”.
Mr Sukkar explained that the decision ultimately comes down to risk-aversion because, “quite understandably, the public expects the least risk possible with taxpayer dollars”.
“There is no doubt that if faced with a large, well-credentialed tenderer who has a great track record and can point to a thousand different projects, who has partnered with the government before, that they are looked upon much more favourably than the upstart, new small business,” Mr Sukkar said.
“I don’t think it’s a great outcome, don’t get me wrong, but there is a logical reason why I think it ends up that way.”
Maja Garaca Djurdjevic is the editor of My Business.
Maja has an extensive career as a journalist across finance, business and market intelligence. Prior to joining Momentum Media, Maja spent several years unravelling social, political and economic intricacies in Eastern Europe.