Carving out O'Connor's small business task

Brendan O'Connor's ascension to cabinet is good news for small business people, but he will have a difficult task challenging the current big business, big union economic orthodoxy.

Credit where credit is due. Prime Minister Julia Gillard has taken a big step forward for small business people. She’s appointed a new small business minister, Brendan O’Connor. For the first time the minister sits in cabinet, at the heart, not the fringes of government decision-making.

At long last a Labor government is recognising the true, central role small business plays in the economy. Cabinet is where this minister belongs.

But credit also to Opposition Leader Tony Abbott. He’s had a firm policy for some time to have the small business minister in cabinet. In fact his shadow Small Business Minister, Bruce Billson has long been in shadow cabinet. Abbott’s position created a policy and political advantage for him, and Gillard has sought to close this off.

Credit also to the Council of Small Business Australia because its been calling for this since 2006. The Council's CEO, Peter Strong has been active over the last twelve months pushing the profile of small business to new heights. As the relatively new chairman of the Council I’ve become aware that the small business issue is heavily resonating on the private polling of the major political parties. When this happens politicians react.

But putting the politics aside, look at the economic facts. 2.1 million people in Australia are self-employed. They are individuals who are ‘businesses’ in their own right. 1.1 million don’t employ anyone. The other million employ around another 6 million Australians. That is, around 8 million of the 11.4 million workforce work in or are small business people. 1.7 million work in the public sector leaving 1.7 million in big business. Given these facts it almost trite to say that small business is the ‘engine room’ of the economy. In many respects small business people ‘are’ the economy.

That’s not to say I don’t love big business. Give us any day the multi-billion dollar mining investments for example. But these investments are heavily reliant on small business people delivering the services that turn mining investments from concept to reality. The new big business model relies on cascading subcontracting for delivery. This is particularly so in mining. Employee numbers are minimised. Self-employed small business people give higher results. So it is through the rest of the economy.

This explains why some 96 per cent of Australian businesses are small. This is why government policy and regulation needs a revolution. This is why having the small business minister in cabinet is so important.

Since anyone can remember economic regulation has been big-business orientated. Governments are big organisations. Big business and big unions have the time and money to talk with big government about how to regulate the economy. Economists only understand ‘big’. They all talk the same language, big talk. They design regulations to suit ‘big,’ and small business people are supposed to ‘suck it up’ and have the resource of ‘big.’

The only problem with this is it creates dysfunctional regulation, regulation that doesn’t work for the bulk of the economy. Here’s the challenge for the new small business minister, ex-union boss Brendan O’Connor. If his position is to have relevance, he’s in charge of a revolution of understanding and approach.

He’s confronted with an opposition shadow small business minister, Bruce Billson, who already gets this. Billson has driven the coalition's policy in new directions with willing encouragement from Abbott. They support fair contract laws for small business people and a federal small business commissioner. They plan to shift obligations for superannuation payments from small business people to the Tax Office. Billson has put together a coalition package that amounts to substantial economic reform with the small business concept at its heart.

The Gillard government is way behind. They have an aggressive ‘salami tactics’ campaign of destroying small business people. This includes massive new red tape reporting of small business transactions in the construction sector.

They are killing off home-based businesses in the clothing industry by declaring self-employed people to be employees. They are neutering the ability of owner-driver small business people to control their contract pricing, the essence of being a business.

In September last year Gillard gave a major speech launching a repositioning of Labor philosophy. Central to that was the acceptance of individualism as existing alongside collectivism. She was conceptually spot on. But since then her government’s actions have been aggressively to destroy individualism. These have not been the actions of someone who’s word can be trusted.

However the placing of the small business minister in cabinet is the first sign of action supporting her political sales pitch. For Small Business Minister O’Connor the task is now serious. Substance must follow appearance.

O’Connor's task is huge. The union and broad Labor movement remain frozen in fear at the rise in individualism represented most strikingly by self-employed people. This is the collapse of class consciousness, something that terrorises Labor.

O’Connor has to stop the government's attack against small business people. He has to strike into new economic reform that challenges the big business, big union economic orthodoxy. The Labor big business/union establishment won’t like this. Good luck. We’re watching!

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

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