Editor's picks: Small is beautiful

With big business suffering, what will get small business moving again? Plus, one free article from the KGB.

After weeks where corporates dominated the headlines, the Spectators have been taking a closer look at what is facing the small business sector. The economy appears to be roaring out of the doldrums, with confidence up and GDP surprising on the upside. But with big job losses yet to filter through and the impact of the closure of the motor industry still a few years away, getting the engine of the economy, small business, going is critical.

What role are the banks playing in helping small business along? The banks themselves say that they'd love to lend money but businesses are just not borrowing.

Stephen Bartholomeusz writes that maybe the banks are playing it too safe.

That’s partly a function of their own risk aversion and focus on balance sheet strength in the wake of the financial crisis but it also reflects the risk-aversion of businesses large and small over that period.

While demand for business credit does remain weak and the outlook for demand uncertain, there is an argument that the banks as a group aren’t taking sufficient risk for the good of the economy.

ANZ appears to be one bank that is aggressively pursuing small business customers and have added 30 thousand new ones. As Stephen writes, other banks will be aware of that growth, which may be a good thing.

Rob Burgess writes that in the hullabaloo over Qantas, the Coalition has continued to push its carbon tax repeal politicking, leaping onto a statement by a "low-level Qantas staffer" that the carbon tax wasn't the problem. The carbon tax is a cost, sure, but not a problem in terms of competing with Virgin - both companies pay equal amounts of it - and for two days the real debate around the aviation sector was sidetracked. It's symptomatic of an ideological obsession with the carbon tax that pushes other reforms off the agenda. Burgess speaks to the Council of Small Business' Peter Strong, who says the carbon tax is low down on the list of priorities and hasn’t caused a single small business to fail. Burgess argues

At both the small and big ends of town, the carbon tax is a small impost that is virtually irrelevant to Australia’s continued prosperity. Why it became a national obsession, and prompted four of our five major business lobby groups to issue a joint statement yesterday, will have historians scratching their heads for years.

There's one other big Labor platform that is under threat -- NBN. It’s future is very much in doubt according to Alan Kohler because with TPG and Telstra about to cherry pick off the best, and cheapest, city customers (those in apartment buildings), which will mean the NBN will become the ‘whitest of white elephants’.

Kohler (UNLOCKED) writes;

The NBN is, at heart, a mechanism for subsidising regional broadband. If its urban services are not a profitable monopoly, it can’t do that and the whole thing turns into a budget-eating monster.

Connecting apartment dwellers looks like good business strategy for TPG, particularly given that the building approvals figures show that the majority of residential construction is in the apartment market. In fact, almost the entire rise in approvals was in the high-rise sector. It’s a sign of our changing demographics according to Callam Pickering but it also poses some challenges.

Pickering says;

The RBA will certainly be happy to see that interest rates continue to have an effect on interest-rate sensitive sectors of the economy. But those who believe that the housing sector will do the heavy lifting for the post-mining boom economy may be left disappointed.

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Graph for Editor's picks: Small is beautiful

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