The Small Business Association of Australia recently made a submission to the Australian Government for consideration in policy planning for the upcoming budget. Taking into account the largest Australia Government Deficit inherited in history, the SBAA has drafted 5 Short Term Quick Fix Solutions to help Small Business.
Prior to the Pandemic, the Australian economy faced prolonged floods, drought and bushfires, resulting in death and destruction on a massive scale. This hit to the Australian economy was compounded by the onset of the COVID-19 Pandemic, resulting in many small businesses left to do the heavy lifting with little to no immediate assistance.
Whilst many believed that Small businesses would fold during this period, the reality is that it can often take 12 months or longer before a business is forced into this position.
With the last 3-5 years having a significant impact on the viability & operation of Small Businesses in Australia, the SBAA has proposed these 5 short term quick fix solutions to help relieve pressure and get small businesses back on track to
SUBMISSION 1 – Post Pandemic Assistance Package
The SBAA believes there should have been a post pandemic moratorium for up to 24 months which would allow small businesses to recover. To combat this, the SBAA has suggested that a $5000 package be made available for individual micro small and medium business owners to be used to attain Professional advice to ascertain the viability of the business that may include re-structuring and/or to bring ATO compliance issues up to date.
SUBMISSION 2 – Late Payments
Late payment is costing the Australian economy billions and creating serious cash flow issues for small business.
Small business is disproportionately feeling the brunt of late payments according to the latest CreditorWatch data. Late payment rates for small businesses are on average three times greater compared to big businesses. The stark difference in payment rates reflect the challenges small businesses face in enforcing payments, terms and collecting on arrears.
According to the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) one in four big businesses are taking more than 120 days to pay small business customers with just three in ten paying within the first 30 days – small businesses are not given this privilege when it comes to prompt payments.
The SBAA suggests that the Australian Government adopt a policy similar to the EU directive for late payments;
The directive aims to achieve a decisive shift to a culture of prompt payment and requires debtors to pay interest and the reasonable recovery costs of the creditor if they do not pay for goods or services on time. The limits are within 60 days for businesses and within 30 days for public authorities. The EU Directive for late payment imposes a penalty of 10.5% pa plus reasonable compensation. The lateness penalty is calculated daily.
SUBMISSION 3 – Saving Small Business
Due to the current economic conditions in Australia, we are seeing more and more business facing legal action taken against them, being wound up or liquidated. And whilst this may be an inevitability for some businesses – it should not be considered the norm.
The SBAA believes the current demise of small business is a result of a lack of understanding of what a small business really is and what its needs are post pandemic. Some Policies and other challenges can take up to 12 months or longer which affect the operations of a small business, which does not allow businesses the time to investigate possible solutions such as restructuring.
The SBAA calls on the government to freeze the following for a 12 month recovery period:
1. Insolvency
2. Wind Up Orders
3. Liquidation
This 12 month grace period allows the business owner to implement changes and avoid unnecessary closure. This period will also provide relief to small business creditors, allow staff to keep their jobs and provides the ATO with the means to continue collecting tax payments.
SUBMISSION 4 – Regulation and Regulators
The SBAA strongly supports the office of the Australian Small Business & Family Enterprise Ombudsman and recommends continued financial support. The SBAA urges restraint by not adding further compliance as Red Tape is harming Australian Small Business whilst favouring big businesses, which can absorb compliance costs across a higher volume of output.
SUBMISSION 5 – Aged Pensioners
The SBAA welcomes the changes to the age pension and believes the increase in the earning threshold has helped many Australians.
However, aged pensioners should not be penalised for continuing to pursue employment if they are able bodied and whose health allows for work past the recommended retirement age.
The SBAA recommends lifting the cap on what they can earn before losing part of their pension.
There are many benefits to increasing the earning cap such as:
1. Alleviating poverty.
2. Utilising available business skills, experience and knowledge.
3. Filling targeted shortages in the workforce.
How it would work:
Once a person reaches the Age Pension level, they become entitled to receive the allowable pension, according to their financial situation and if they choose to, can remain in the workforce for the rest of their life. The pensioner would then report both their pension & earnt wages to the ATO, and whilst some tax may be paid on those wages – the pensioners net income will be higher by the EOFY.
The SBAA is here to help small business.
If you are in need of assistance please contact us on 1300 413 915 or email us at info@smallbusinessassociation.com.au
