Businesses are the lifeblood of any community particularly in regional areas like Port Macquarie. Too often governments at all levels are distracted by the media driven white noise of fringe and single interest groups instead of focussing on economic pragmatism. Without a vibrant and successful business sector unemployment rises, people can’t pay their mortgages and there is reduced revenue to support the community.
In Australia today there are over 2 million small businesses employing 4.8 million people or 44% of the workforce. Here in Port Macquarie there are nearly 3000 small businesses employing over 9000 people. Hence small business is the backbone of the economy at a national level as well as being at the very heart of every local community in regional areas. Compared to other developed countries we have a vibrant and dynamic small business sector. Despite this we are not as good as we should be at encouraging and supporting those small businesses to grow into medium or large enterprises.
The benefits of growing small businesses into medium and large enterprises are more employment opportunities, innovation, investment, a more diverse economy, competition for multi-nationals, greater skills training and greater resilience within the local economies in regional areas. Despite governments at all levels and of all political persuasions talking up their credentials when it comes to supporting small business the fact remains that small to medium enterprise is highly taxed and over-regulated.
Government intervention including taxation and compliance or red tape is one of the main impediments to growth in small business. Company tax rates for larger companies remain at an internationally noncompetitive 30%. Whilst tax cuts have been legislated for small businesses our political parties cannot agree on passing that on to larger enterprises.
State based payroll taxes are being progressively reduced in NSW to bring them into line with other states. However, this tax burden increases as a business grows and employs more people so it is effectively a disincentive to business owners to increase the size of their operation. Why then do state governments impose payroll tax at all when it is simply a regressive tax that penalises businesses for employing more people.
Similarly stamp duties levied on the purchase of commercial premises are much higher than residential property. This makes the cost of premises where people work and enterprise is conducted more expensive and acts as a further penalty for business growth. Registration of passenger vehicles for business is also more expensive than private use which is contradictory to the notion that economic activity should be encouraged not penalised.
The Australian Finance Regulator (APRA) often sets lending policy against the backdrop of the latest corporate scandal and the unintended consequences can be detrimental to small business. As we saw with the recent Banking Royal Commission lending policy was tightened ahead of the final report and from October 2018 until February 2019 there was an effective credit squeeze.
These tighter lending rules often make it more difficult for small business operators to obtain finance for expansion. Many small business owners are forced mortgage their homes to obtain finance resulting in an unwillingness to take greater risk and more debt which is in turn a barrier to expansion.
The Port Macquarie Chamber of Commerce in is continuing to support the NSW Business Chamber to advocate for lower taxes, less regulation and more incentives for our small businesses to grow. When business owners feel unconstrained by punitive intervention they will inevitably grow their operations to reach their full potential. That is a situation that will benefit everyone through more employment and a vibrant economy.
Port Macquarie Chamber of Commerce