New battle-lines for 'ripped off' SMEs

Are SMEs really getting ripped off by corporate Australia? New small business minister Bruce Billson is the man charged with finding out, and taking up the fight where problems are found.

Depending on who you speak to, there either is (or isn't) a war going on out there: a war between big-end-of-town baddies and struggling SME battlers. 

If there is a war, it's obvious which side the Liberal Party would take. Backing small businesses and the 'forgotten people' that own and staff them is in the party's DNA. 

Moreover, in recent years, many Liberals have been heard to mutter about 'big Labor, big government, big corporations'. 

Take, for example, the supposed supermarket duopoly. The massive workforces of Coles and Woolies – around 100,000 and 200,000 repectively — are predominantly represented by the right-wing Shop, Distributive and Allied Employee's Union. 

Some accuse the SDA of working too cosily with Coles and Woolies to protect all of their interests at the expense of small food processors and other suppliers who are not union members. This has not been demonstrated to date, but it's a frequently heard, but unsubstantiated opinion. 

Nonetheless, in 2012 somebody with a better 'opinion' than most did speak out. Liberal senator Richard Colbeck, then chair of a  joint parliamentary committee inquiry into the food processing industry, said suppliers were operating in a "climate of fear" in respect to the big two retailers.   

So again, whose interests would an Abbott government defend if widespread abuse of market power were proven? The little guys, of course. 

The Coalition took important pro-competition policies to the election. It will extend unfair contract provisions to small businesses (previously they were aimed at protecting consumers) and is working on a root-and-branch competition law review. 

The review's terms of reference will be released for public consultation before Christmas, and small business minister Bruce Billson's office says it will lead to recommendations and policy reforms (where necessary) in plenty of time for the next election. 

However, that's three years off. It's not certain that the Australian economy can wait for its SME employment and growth engine to start firing. 

The Coalition marched triumphantly to the 2013 election without very much scrutiny of its claims that 'scrapping the carbon and mining taxes' would be a boon to small businesses wishing to invest and employ new staff. 

It was a great slogan, but there is very little substance to the claim. Though mining majors have complained about 'sovereign risk' and threatened 'capital strikes' over the MRRT, it is actually such a small tax as not to matter at all. 

Th idea that cancelling it will see a spike in confidence in the SMEs servicing the mining boom is ludicrous. SMEs in this sector are struggling, but the real correlation is with subdued demand for commodities, lower commodity prices, and the natural end of the investment phase of the mining boom which, over time, will reduce the number of jobs to between one-quarter and one-eighth of the size during the construction boom. 

Alongside these factors, the MRRT is a gnat on the mining industry's rump. 

Likewise the carbon tax. Averaged across all sectors, electricity costs represent around 3 per cent of business costs. Overwhelmingly, the increase in power bills during the life of the Clean Energy Future policy was due to network investment charges being passed on to consumers, not the carbon tax.

Add to that the fact that the policy included a complicated system of rebates and subsidies for troubled sectors – including the food processing sector where electricity costs are high – and the Coalition's claim that 'scrapping the tax' can make a major difference to SMEs quickly unravels. 

That's why the Council of Small Business Associations has made such a noise about competition policy – because it believes, at present, that it's members really are struggling to work with large corporations such as Coles, Woolies, Westfield and other property developers and retail property owners. 

COSBOA is essentially assuming there is a war on out there, until it's proven otherwise. Executive director Peter Strong says a 'Competion Summit', to be held within a month, should shine a light on the issue, though only if people will speak candidly and say the things he claims they say behind closed doors. 

It's likely the summit will produce some sound and fury, but the real game will be played inside the Coalition's joint party room. Its review of competition law could be contentious within Liberal ranks. 

For instance, Kelly O'Dwyer, who for some bizarre reason is not in Abbott's first ministry in any capacity, has expressed fears that competition law is open to misuse. The Spectator magazine noted recently: "O’Dwyer bravely admits that she is opposed to any ‘fair competition’ policies that amount to protection of ‘inefficient’ industries."

So just who is being inefficient? Coles, Woolies, Westfield and their ilk, or the little guys who are their suppliers and tenants? That's what the competition review should finally, definitively answer. 

If the answer is"it's all good!", then Peter Strong at COSBOA says he's happy to fry other fish. In the meantime, he says: "We know Bruce Billson is on our side, and being moved to within the Department of Treasury, he's got the resources to take up this fight. Our job is to give him the support he will need to convince the party room that real reform is needed."