Policy options for Australia

Research commenced in 2013 following the creation of the Institute of Public Accountants - Deakin University SME Research Partnership. Since inception, the partnership has developed numerous substantive policy documents and held two key policy-focused SME conferences. The culmination of the work undertaken to date has been the development and launch of the Small Business White Paper in August 2015.

The principle purpose of this Small Business White Paper was to present evidence-based policy recommendations to help Australia’s policymakers deal with a looming economic crisis.

Research findings revealed that:

• Australian firms have been going backwards since 2007 on seven key indicators – product differentiation, profits, productivity, exporting, outsourcing, training and IT expenditure
• only one in seven businesses consider innovation is important
• only one in eight businesses have an international market presence
• many medium-sized, well established firms with the potential to expand into international markets consider only the national market as their end goal.

The Small Business White Paper focused on three key pillars – human capital (people), financial capital (investment) and technological change (innovation) – to achieve the end goal of building a more productive and dynamic small business sector. Recommendations included to:

• increase availability of affordable loan finance through a state-backed loan guarantee scheme
• introduce a publicly supported venture capital fund to ensure that risk capital is made available to high potential young firms.
• rethink public policy surrounding innovation in the SME sector, including government support for Research and Development and tax breaks for companies acquiring new technologies not developed in-house.
• revamp education and training to address the significant skills deficit in the economy
• continue government efforts to reduce red tape
• review Fair Work laws and competition policy, including making award system more flexible
• ensure taxation policy drives business activity and entrepreneurship that will encourage growth, productivity and employment
• prepare an overarching trade policy strategy that identifies impediments to trade and investment.

The report was presented to the Australian Minister for Small Business at Parliament House Canberra in August 2015. Since then both of Australia’s major political parties have included several of its key policy recommendations in their manifestos. In particular the recommendation for a pilot small firms’ loan guarantee scheme has been taken forward and ongoing discussions are taking place about operational details. The Institute of Public Accountants regards the White Paper as an important policy document that presents recommendations around the productivity framework of human capital, financial capital and innovation; aimed at helping Australia maintain and improve its living standards into the future by boosting productivity in the small business and SME sectors. The impact of Professor Marc Cowling’s contribution to this influential policy document is acknowledged to be significant.