Hope glimmers in Abbott's small business spotlight

Small business has floundered through political neglect in recent years but a new era in centre stage could give it much-needed momentum.

Slowly the Abbott opposition is revealing just how dramatically different business regulation and policy is likely to be under an alternative government. In essence they are preparing to put small business at the centre of key business policy in a way never before seen. And particularly, it might seem, with competition laws.

The steps they propose are a stark comparison to the Gillard government on the small business and general business regulation front.

Small business people have done badly under Gillard. Last month Robert Gottliebsen commented on the dramatic drop - 130,000 - in the number of independent contractors in the last two years. This has resulted in the total of self-employed small business people being at an historical low of 17.2 per cent of the workforce. 

Yet still, 62 percent of the workforce (7.1 million people) work in small businesses demonstrating the importance of the sector.

I’ve laid the blame for the drop in self-employed numbers directly at the policies and practices of the Gillard government. On the evidence, they appear to have had an intention to suppress small business people. I predicted this in early 2011 but it’s unfolded with greater speed and aggression than I’d thought. Perhaps the starkest example has been the Australian Tax Office's new policy of denying individuals Australian Business Numbers. I explained why, without an ABN it’s impossible to run or be a business in Australia.

Abbott’s policies started to become clear early this year. The Coalition promises to create a million new jobs in five years. The principle vehicle to do this is to create 30,000 new small businesses a year, the logic being that this is where most new jobs will come from.

A key part of how they are going to do this has best been summarised by Shadow Treasurer Joe Hockey first in his recent KGB Interview and then at his May Budget Reply at the National Press Club.

The Small Business Minister will be a cabinet position with the department situated in Treasury. This is structurally significant. Normally small business is an afterthought buried in a large functional department. But locating it in Treasury puts small business at the heart of where economic policy is formulated. Hockey reveals the reasoning saying “the benchmark for regulation should be a small business and not big business for the generic business regulation in Australia”.

Add to this that the Coalition intends to conduct a "root and branch" review of competition law, the first review in 20 years. Then combine it with their stated policy of extending consumer unfair protection laws to small business people and it adds up to potential game changing reform for small operators.

An Abbott Coalition government is shaping up as a government intent on a major microeconomic reform agenda that’s as yet largely unnoticed. Commercial law and regulation looks set for a big shake up with small business at the centre of thinking.

But there’s more. Think of Hockey’s comments on the ATO. Hockey has announced a new Parliamentary Oversight Committee is to be established to do one thing, oversee the ATO’s tax administration. This will surely result in a persistent, on the record flow of complaints and stories about ATO behaviour.

Hockey went further in his budget reply speech. He said, “I have deep reservations about the ATO being both an administrator and a prosecutor… the Coalition stands ready (if necessary) to break up the tax office so that its policeman functions are separate to its responsibility for administering the tax system.”

The Costello reforms of 2000 to the tax system were not just about the GST but involved the biggest reform to tax administration for half a century at least. Joe Hockey looks interested in advancing that reform.

The final small business reform message for the moment from Hockey is that government departments will automatically be required to pay interest if they fail to pay small business accounts within 30 days. This is a smaller detail in a larger picture.

What the Abbott Coalition is saying is that their jobs and small business growth agenda can be achieved. Certainly there is plenty of undoing to be done from the last three years. But much, much more important is a major economic reform agenda conceptualised around small business at the core of the economy.

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

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