Labor’s Shadow Minister is urging the federal government to implement a long-term economic recovery plan.
The pressing need for smaller enterprises to access sound advice, as well as programs to support industry and create jobs, are Labor’s policy focus for small businesses to help them recover from the pandemic.
This was the message from Brendan O’Connor, Shadow Minister for Employment and Industry, Shadow Minister for Science and Shadow Minister for Small and Family Businesses, at Intuit QuickBooks’ most recent town hall meeting, facilitated and hosted by Intuit QuickBooks, Senior Manager for International Government Relations, Simeon Duncan.
These virtual events bring together hundreds of small business owners from all over the country in an opportunity to hear from policy makers and develop a deeper understanding of small business owners’ pain points and their accounting advisors.
Here, we explore Labor’s Shadow Minister for Small and Family Business, Brendan O’Connor’s insights about some of the building blocks needed to support small businesses as they grapple with challenging economic conditions.
An advice-led recovery
Mr O’Connor led his address with a call for the federal government to give smaller firms access to good quality business advice so they can operate to their full potential in the months and years ahead. He noted smaller businesses sometimes struggle because they don’t have the same advantages larger businesses have, including support from external advisors.
The Labor party supports a program that would give small businesses access to vouchers they could spend on business advice. “This is something practical the government could do,” he said.
Labor is also encouraging the federal government to broaden the range of businesses that can apply for the JobKeeper subsidy. The federal government recently announced a refined JobKeeper program would be extended to March 2021.
This $101.3 billion scheme will have more stringent means tests applied from September this year, with eligible businesses required to demonstrate a significant decline in turnover in the September quarter versus the previous year to continue to access these funds. At the moment eligible businesses receive a $1500 fortnight for each of their employees, although this figure will drop to $1200 from September for businesses that still qualify.
Recent data suggests businesses are reporting an improvement in turnover. According to statistics released in early August by the Australian Bureau of Statistics (ABS), while almost half (47 per cent) of all businesses reported a drop in revenue in July, only 27 per cent expect their revenue to drop in August.
Supporting future growth
Mr O’Connor stressed the need for a speedy policy response to help the small business sector during and after the pandemic. “The need for speed is critical and small business gets this because it’s essential for their cash flow,” he argued during the town hall session.
In particular, he says there must be support for sectors such as construction because when the building sector does well, this has a flow-on effect to other industries such as food and entertainment.
O’Connor said despite the present lockdown in Victoria, as well as uncertainty about the potential for future COVID-19 outbreaks, public policy must plan for the best possible outcomes. “To have a quick recovery, we have to invest in industry policy.”
This means government spending to create employment through essential nation-building infrastructure projects. He said this may involve the federal government having to raise funds to finance these initiatives, but noted interest rates are at all-time lows, which should reduce the impost on the government if it goes down this path.
The Shadow Minister is one of a number of voices urging the Government to explore ways to stimulate job growth. The Reserve Bank of Australia (RBA) governor Philip Lowe last week called on the federal government to prioritise jobs.
Mr Lowe told the Senate Economics Committee: “…the priority needs to be to get people into jobs because [unemployment] is where the scarring comes from both in terms of people’s economic performance but also their success as a member of society.”
Construction and infrastructure are just two of a number of sectors that require stimulation to help support future economic growth. The pandemic has revealed how important it is for the local manufacturing sector to be reignited. “We must invest in manufacturing and R&D work in high-end areas to secure jobs,” Mr O’Connor told the forum, adding, “there are already many remarkable small businesses in manufacturing.”
Importantly, he stressed the upcoming federal budget on 6 October must lay out a plan for economic recovery beyond March 2021 when stimulus packages such as JobKeeper are scheduled to end. “We expect the budget to outline a plan for the next two to three years.”
Wage subsidies, industry policy and employment programs must be the essential ingredients of this plan to help small businesses survive and thrive after the pandemic and beyond.
Moving forward: practical tips for small businesses
In line with Brendan O’Connor’s message it’s important to plan for good outcomes, there are plenty of steps small businesses can take to put themselves in the best possible position for an economic recovery.
- Keep on top of cash flow to ensure the business can meet its obligations. The QuickBooks Cash Flow Planner tool uses machine learning to provide real-time cash flow predictions over a 90-day period based on patterns in users’ data and bank history. This can give you a clearer picture of where you stand and how to manage expenses
- Understand and apply for the wide range of grants small businesses can access. You could even get advice from an accountant or other specialist for a better chance of success.
- Consider accessing the SME loan guarantee scheme that runs until 30 September. Businesses that take out a loan under this program don’t need to make repayments for the first six months. The SME Loan Guarantee Phase Two scheme will replace this initial program from 1 October this year until 30 June 2021. The second phase allows borrowers to extend loans taken out under the scheme for up to five years and increase maximum loan sizes.
It’s been a tough time for many small businesses. But the bi-partisan approach the Coalition and Labor parties have taken will help small businesses and their advisors negotiate this difficult period and prepare for future success.