The government's champion of small businesses has warned that Australia is in danger of "sleepwalking" into a "big corporate' economy".
The importance of the country's small, family-run enterprises in the economy has fallen steeply - and the trend needs to be reversed for the country's economic good, according to the Small Business and Family Enterprise Ombudsman.
Bruce Billson said that small businesses were "rightly celebrated" for generating a third of the country's output and providing employment for two in every five workers in commercial companies.
"But in 2006, small business contributed 40 per cent of GDP and employed 53 per cent of those with a private sector job.
"This is a worrying trajectory. We are sleepwalking into a 'big corporate' economy."
The ombudsman feared that too many small businesses were going under as higher interest rates bit into their profits - and into he profits of those who owe them money.
"The value of debts owed by small businesses increased over the last year and around half of small business loans are secured by the family home," Mr Billson said in an opinion piece ran across ACM's mastheads.
"Payment disputes are often an early warning sign of cash flow issues. These now account for 42 per cent of disputes where we provide one-to-one assistance to small businesses."
Part of the problem was the removal of pandemic support but there were also longer-term factors like inflation and interest rates.
"The labour market remains tight but has eased slightly over the past year," Mr Billson said.
"While this is encouraging for small businesses looking to hire staff, there are fewer smaller employers than last year. Queries about recruiting new staff have reached their lowest levels in nine months."
The ombudsman's office has created what it calls a "pulse" to measure the favourability or otherwise of the environment for small businesses.
It showed that the environment shows the business "remains well below the long-term average".
On the upside, though, the research showed a continued appetite from people to crate businesses.
"A bright note is queries from people considering taking the leap into business have remained relatively high since February and business formation continues. Similarly, there has been a rise in small business owners interested in growth ambitions and seeking business coaching and mentoring."
But to counter what remains a "challenging" environment, the ombudsman is recommending a series of steps which he thinks would make life easier for small businesses. They include:
- Look at how to change the tax system "for new small business owners to allow them to keep more of their income to re-invest in their business during the critical first three years".
- Put more focus on getting regulation right "to help, support and enable small business owners, who do not have the resources of big business, meet their obligations.
- "Require every cabinet submission, preliminary and formal regulatory impact statement and new policy proposal to include a small business impact statement."
- "Give small business a greater chance to compete for government contracts". The rules currently favour "established and larger suppliers".
- "Make it mandatory for banks and other providers to charge the lowest fee for tap-and-go, dual-network debit card transactions as the default, saving small business around $1 billion a year."
- "Create a dedicated Small Business Commissioner and Division within the Fair Work Commission to honour the 'special circumstances' of smaller employers existing workplace law are required to reflect and to oversee the implementation of proportionate instruments, procedures, practices and protections."
