Abbott's small business power tilt

It's not often that I'd recommend the reading of a political speech. But if you're interested in economic policy direction read the words of Bruce Billson, shadow small business minister, speaking at a Council of Small Business dinner last week.

Normally political speeches on small business issues are lightweight, long on appearance of doing something but without any policy substance or interest. Yet this speech shows an entire new direction in thinking by the Abbott Opposition toward economic policy.

Instead of economic regulation being driven by the traditional big business/big government/big union ‘corporatist' view of a market economy, Billson is revealing a bottom-up approach. He identifies the conceptual starting point for regulation as being small business. This is substantially different in comparison to normal economic orthodoxy and signals an intent for significant economic reform from an unexpected direction.

I alluded to this economic shift early this month, commenting in Business Spectator on Gillard appointing the new small business minister, Brendan O'Connor, to cabinet (Carving out O'Connor's small business task, March 5). It's become clear that Labor has decided they must court the small business vote if they are to have any chance of winning the next election.

Politically that makes sense. Of the 11.4 million strong workforce, around 8 million are small business people or work with small business people. That is, the bulk of the workforce relate in their thinking to small business, not big business. That has political as well as economic implications.

Unpublished data I've seen shows that in recent times, amongst the 2.1 million self-employed small business people, the primary vote for the Liberal/National Parties has ranged from as low as 34 per cent to as high as 63 per cent. This is surely the profiling of a significant swinging voter demographic.

Yes, on a two-party preferred basis the self employed are more likely to vote LNP. But it's pure mythology to believe they are rusted on LNP voters. In fact for the LNP, the holding of this assumption is dangerous. The data indicates that there was a significant shift to Kevin Rudd in 2007 from the self-employed group. This was a big part of the explanation for his electoral success. Self-employed people shifted back toward Abbott in 2010.

Are the major political parties courting this vote? You betcha! The question is however, whether the courting is political fluffery – or is there substance?

The Gillard government seems to have recently ‘re-discovered' the small business issue. On current form I'd anticipate a series of announcements that are sales pitch fluff without substance. I'd be happy to be proven wrong.

But Abbott, through Billson, is laying truly solid groundwork. And big business and big government should look closely because it's going to impact the fundamentals of how they do business. It's not just a pitch to small business people. It's an economic game changer being envisaged.

Read Billson's speech from page 12 on, in particular.

He's flagging a "root and branch" review of competition policy, the biggest since the Hilmer review two decades ago. In this he challenges the dominance of the two big supermarkets and their relationships with small business suppliers and small retailers. He attacks the neutering of laws limiting the abuse of market power. He gives evidence of Target unilaterally ordering suppliers to reduce their prices by 5 per cent.

Billson attacks the imposition of commercial demands on small business people under duress from dominant players. He talks of distortions to the trading environment of businesses competing against dominant players. In my observations we see this happening in retail, transport, commercial construction and government contracts for example, in ways that are not tolerated of our domestic banks.

Billson says, "I am not convinced that the current competition framework and tools have proven adequate at enhancing the welfare of Australians through the promotion of competition and fair trading and provision for consumer protections.”

For those in big business, half asleep at the wheel, wake up! Change is brewing that you don't expect.

Billson commits to extending unfair contract protections to small business people, something the Labor government reneged on in 2010 under pressure from big business. He wants small business representation on key bodies such as the Reserve Bank.

He's calling on the ACCC to lift its game by developing practice guidelines that encourage fair commercial practice. He'll put in place a federal small business commissioner mediating on commercial disputes and closely interfacing with the ACCC. He flags making federal government agencies subject to competition laws where they now wholesale exempt themselves.

Billson cites the scrapping of the home insulation scheme as an example of a government agency inflicting harm on small business in a way that would not be tolerated under normal commercial arrangements. A small business commissioner with teeth over government agencies looks likely. That'll cause the Canberra bureaucratic elite to sit up!

Abbott is frequently accused of not having policies. Billson has just shown that accusation to be a lie. What's quietly brewing is a major micro-economic reform agenda starting at the broad base of our economy (small business), of the likes not before seen.

Ken Phillips is executive director of Independent Contractors Australia and author of Independence and the Death of Employment.