Labor's SME 'failure' is a myth

Labor's small business legacy is far more substantial than the policy debacles of 'school halls' and 'pink batts'... and pretending otherwise does nothing for development of policy to help the sector.

What have the Romans ever done for us? Nothing! And what has Labor done for small business? Nothing! Boo!

It’s been worrying in the past couple of days to see people who should know better asserting that Labor has done absolutely nothing for small business, unlike the angelic Coalition governments of John Howard. 

That’s a staggering position to take given that the Abbott-led Coalition voted for round one of the $10.8 billion Rudd stimulus package in 2008 – a cash splash and infrastructure splurge that kept retailers, sub-contractors and many other SME sectors alive as the first wave of GFC pain hit the nation.

The Coalition did not vote for the second round of stimulus in 2009. But that $42 billion adrenalin shot to the economy, besides $950 cheques to most households, included ‘hardship bonuses’ of $950 to 21,000 farmers and farm-dependent small businesses, and $2.7 billion in additional investment tax breaks for SMEs.

Small businesses were also the main beneficiaries of the ‘school halls’ and ‘pink batts’ schemes. Both have been attacked as administrative stuff-ups – or worse (more on that below) – but the reality for small businesses is rarely acknowledged in the Australian media. 

The over-spend of school halls became the main criticism of that scheme. Some cost a lot more than market value, but overall the final cost blowout was about 14 per cent ($12.4 billion initially, topped up with $1.7 billion).

The logic of slamming that as one of the biggest wastes of government money ever is utterly insupportable. 

The Coalition voted for a $10.8 billion handout of money in round one of the stimulus which was effectively a 100 per cent ‘waste’ of public money. 

But when a similar amount was directed into the pockets of small contractors, who returned roughly 90 per cent of that money as brand new educational assets – the school halls – Labor’s critics cried blue murder.

The ‘Building the Education Revolution’ program, as it was known, was a jobs program, not a building program. It prevented the financial collapse of thousands of small businesses and individual contractors and that was its primary purpose – not ensuring that Mr G had somewhere to run his interpretive dance workshops.

Moreover, many of the SMEs that were saved use their homes as collateral for the finance required to keep their businesses running. Had they collapsed, the housing market would have followed. 

The home insulation scheme, or ‘pink batts’, was another matter altogether – it was a grand administrative stuff-up. Giving the job to the Environment Department, which had never been involved in this kind of front-line service delivery before, was a disaster that claimed four lives, damaged and destroyed properties and lead to widespread rorting of government money. 

That’s how not to run an SME jobs program – long-term industry participants went out of business, while fly-by-night SMEs sprang up, took the cash, and disappeared again. Jobs were created at the height of the GFC, it’s true, but it left thousands wishing the scheme had never been created. 

But if Labor’s stimulus spending had a shameful black spot, there are other areas of policy where the Gillard government pressed ahead with reforms that John Howard should have made. 

It put a small business minister in cabinet and restructured the Treasury, Finance and Innovation departments to accommodate then-minster Brendan O’Connor’s SME brief. It consulted with business owners as never before and introduced goodies such as the instant asset tax write-off and loss carry-backs to help SMEs get through a tough economic period. 

Peter Strong, executive director of the Council of Small Business of Australia, says his board has never been consulted more than under the Gillard government. 

Labor was trying to catch up on the Coalition’s historical position as the natural party of small business, and so Strong says COSBOA was given a front-and-centre place at key national fora, including the Tax Reform summit, the Council of Australian Governments, the National Panel for Economic Reform and the Economic Forum of early 2012. 

Two weeks ago, COSBOA was telling me the Coalition was way ahead in its offering to small businesses, but the raft of Rudd annoucements in past weeks – cynical or otherwise – has brought the two sides’ small business platforms much closer together (Can we trust the raft of SME promises? August 23). Those additions include relieving SMEs of red tape burdens relating to superannuation and paid parental leave, as well as making Business Activity Statement lodgings less frequent and therefore less onerous. 

The COSBOA board will consult this weekend, and let its members know early next week which side of politics has the best policy mix. But to be even considering that there is a choice shows how far Labor has come in this policy area.

Strong says that a major factor in the Coalition's favour is Bruce Billson, who Strong thinks has the support and strength within his own party to keep the SME agenda progressing if the Coalition wins government – something that he does not believe happened in the later Howard years (The Coalition's business booster shotsAugust 20). 

Taken as a whole, Labor’s efforts to move into the SME constituency, take the votes and make genuine reforms to foster entrepreneurialism are substantial. This strategic shift by Labor has forced the Coalition to expand its own SME policy platform.

Any assertion that Labor has only hurt small business, and only the Coalition can helps SMEs, is worse that rubbish – it is propaganda that puts party affiliation way above real policy discussion. 

Business owners will just have to watch all the policy pronouncements of the Australian Chamber of Commerce and Industry, COSBOA and others next week as they make their final judgements on SME policies through the last week of the election campaign and give credit where it’s due. 

That may not be enough for Labor of course. Other overpowering concerns – not least the political chaos of the Rudd revivial – will probably trump SME policies as reasons to punish Labor.

But failing to recognise the good Labor did in the SME space in the past six years is partisan revisionism that really helps no one.