Growing pains for small businesses

Image by Shutterstock.
Image by Shutterstock.

The Australian way of "having a go" was now so fraught with risks it was stifling entrepreneurs on virtue of bureaucracy and red tape, said Busselton businessman Ray Mountney.

The former chairman of the Small Business Development Corporation, Mr Mountney, said the economic environment in WA had been hostile for small business for a long period of time.

He said while there were lots of issues attached to it, depending on whether you were regional or metro, high or low rent, or high or low traffic, major factors stifling small business were regulations, compliance, taxes and law.

"It is a tragedy, that is what made our country great, we batted above our weight in so many ways in the world economy, in the market and in sport because there was an intrinsic just give it a go, just have a crack," he said.

"That goes to the very culture of Australia, it is un-Australian not to have a go."

Mr Mountney said the tonnes of taxes, laws which created uncertainty, regulations and compliance costs all contributed to the burden of operating a small business.

"The biggest issue for small business is payroll tax, it is a tax that is an unnecessary tax that stops people from employing people," he said.

"It is a handbrake to employing and developing your business."

Since the state government was elected around 30,000 small businesses in WA have closed, according to Vasse MLA Libby Mettam.

Ms Mettam said during that period there had been an 18 per cent reduction in the number of people operating small businesses.

"Ninety-seven per cent of all businesses in WA are small businesses. This sector employs about 47 per cent of the workforce, so it is an important part of the WA economy," she said.

"It is quite clear that small businesses have experienced many challenges. In fact, a record number of WA small businesses are struggling."

Small business minister Paul Papalia said there were a myriad reasons why a business closes, and not all because of financial failure.

"Apart from those businesses not being economically viable, businesses also shut due to the business operator retiring, the business has been taken over or merged with another entity, the business operator finding work elsewhere, or starting another enterprise," he said.

"Subdued consumer spending is also impacting across the economy and on small businesses. There is also increasing competition and digital disruption."

Mr Papalia said the retail and construction industries were facing the most challenges due to competition from online retailers and economic conditions, particularly a slowdown in the housing market.

The state government have introduced a Bill to make changes to the Small Business Development Corporation Act 1983.

The changes seek to enhance the powers of the Small Business Commissioner to receive and investigate complaints for non-payment of subcontractors and small businesses on state government projects.

Mr Papalia said the Bill would allow the Commissioner to be the 'cop on the beat' to protect the interests of sub-contractors.

"He will be able to conduct random checks as well as targeted inquiries based on intelligence or specific complaints from sub-contractors," he said.

"The reforms give powers to the Commissioner so he can fully use the Sub Contractors Support Unit to improve the culture of the construction industry in WA.

"While the initial focus of the amendment Bill will be on the construction industry, the Small Business Commissioner will also be empowered to investigate other sectors where behaviour is negatively impacting on small business, such as the retail sector.

"The introduction of the enhanced powers for the Small Business Commissioner to receive and investigate complaints about any matter that affects the commercial activities of small business provides another level of protection for the small business sector against unfair treatment.

"This is a significant positive development in delivering a fairer operating environment for the small business sector in WA."

Mr Papalia said the Premier had also indicated that providing payroll tax relief for small business operators was "desirable" and would be considered as part of next year's State Budget.

"While the Premier stated that he would like to lift the payroll tax threshold by $100,000 to $950,000, budget repair remains a competing priority," he said.