“Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence” (Helen Keller)
This quote from Helen Keller – a woman who moved mountains in the face of overwhelming personal odds - perhaps best defines the position that Australia finds itself as we welcome in the New Year.
In 2017, Australia broke the world record by posting 26 years of continuous economic growth.
While Australia literally fell across this record-breaking line, posting just 0.3% growth in the March 2017 Quarter and perhaps explaining why so few of us openly celebrated the achievement – the fact remains that our relatively small country has consistently outperformed that of our much larger counterparts.
But you wouldn’t know it given much of the political and economic commentary published throughout 2017.
In an era where we are bombarded with conflicting messages about the future economic outlook, sentiment – both business and consumer – is the most important determinant of near term economic outcomes.
The relationship between negative sentiment (both consumer and business) and poor economic outcomes is well understood by every small business owner.
A high-profile negative comment by a federal politician or noted economic commentator, for instance, will often result in an almost immediate reduction in the number of customers walking through the door of a small retail store - for at least a week or two.
Similarly, negative national commentary on the near term economic outlook can result in shareholder pressure on larger businesses for cost reductions, resulting in reduced purchase of goods and services provided by the smaller businesses servicing these larger businesses and/or announcements of staff retrenchments.
That is not too say that the community should not be given bad economic news per se. But it is very rare that the economic signals are so clear as to point to a future negative or positive economic outlook with absolute certainty.
At the start of last year, owing to growing concern about adverse impact of negative economic commentary on small business incomes, the Board of the Council of Small Business Organisations of Australia (COSBOA) made a strategic choice.
The choice was to champion the interests of Australia’s 2.1 small businesses – employing more than 6M Australians - through a lens of realistic optimism as opposed to the opportunistic pessimism pedalled by others.
Putting this choice into action initially proved to be more complex than first envisaged but has resulted in the adoption of three principal areas of core focus for small business in 2018.
The first, and perhaps most important, is to improve the nature of the working relationship between big and small businesses.
Populist debate would have people believe that big and small business should be at war with each other.
But with around half of Australia’s 2.1 small businesses providing services to bigger businesses, the reality is that big business is often the customer of many small businesses in Australia - and so big and small businesses need each other.
Big and small businesses also have an equal interest in rising to the challenges imposed by the entry of large foreign competitors such as Amazon.com, as we jointly seek to keep as many jobs and income in Australia as possible.
COSBOA, as the peak body representing Australian small business, entered into a cooperative agreement with the Business Council of Australia (BCA) in late 2017 with a view to addressing some of these issues.
As a necessary first step, COSBOA will be calling on all Federal Politicians to support the extension of the 2017 small business tax cuts to big business in the forthcoming Federal Budget. This action will not only improve the international competitive position of large Australian businesses, but will produce flow-on benefits to small business in the form of increased revenue from the sale of additional goods and services.
COSBOA will continue to work cooperatively with the BCA and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) to address some of the key issues that get in the way of constructive relationships with big business – specifically; late payments and fair supplier contracts. (As at 31 December 2017, more than 70 BCA members had signed up to a voluntary code to ensure that small businesses are paid on time and we plan to work with the BCA to increase the number of signatories to this agreement during 2018).
The second area of focus will be on improving the relationship between business owners and their employees given the critical link between positive employee relationships and positive business outcomes.
Within this context, the recent commentary of some union leaders about unions being ‘at war’ with business is both misplaced and dangerous.
The future wealth of Australian employees – some of whom are members of Australian Trade Unions – cannot be improved by attacking the owners of the very businesses that pay their wages.
Rather the wealth of all Australian’s can be improved by making it easier for Australian businesses – big and small – to grow and share the financial benefits of this growth with the people they employ.
The continuing issue surrounding wage underpayment practices of some businesses – and regular payment of superannuation – must also be addressed. COSBOA works proactively with the Fair Work Ombudsman (FWO) to promote increased business owner awareness of complex award arrangements and stamp out unfair wage practices by unscrupulous business owners.
Ideally, this action will be progressed together with the Australian Trade Union movement, or at the very least, through cooperative actions with those Unions that have a demonstrable commitment to the future well-being of their members - as opposed to those merely pursuing self-interest and/or advancing the political interests of their leaders.
The third and final area of focus for 2018 will be the continued strengthening of relationships with Regulators.
Most small businesses strive to do the right thing in terms of all relevant laws, but can struggle to do so in the face of ever increasing regulatory complexity and onerous reporting obligations.
COSBOA has built relationships with a host of regulators in recent years– ranging from the Australian Tax Office and the Australian Securities and Investment Commission to the Fair Work Ombudsman – to help these regulators better understand the compliance challenges faced by small business.
During 2018, COSBOA will work with these regulators to make it easier for businesses to comply with all laws via improved education and more efficient interactions.
COSBOA believes that positive actions in each of these three areas during 2018, via partnerships that bridge past ideological divides, will contribute to a general lift in business and consumer sentiment that will benefit all Australians.
As so neatly put in Helen Keller’s quote above, “nothing can be done without hope and confidence”. The fundamentals of our economy improved in late 2017 but we must all act cooperatively and positively if all Australians are to benefit from this economic potential during 2018.
Mark McKenzie is the Chair of the Council of Small Business Organisations of Australia