The Federal Government is developing a range of economic measures to bolster small business, as Prime Minister Scott Morrison prioritises smaller businesses ahead of the election race due in May 2019.
The policies being drafted include boosting access to funding for small business to overcome a purported credit squeeze, improved tax dispute resolution with the Australian Taxation Office and helping small companies get paid faster by large customers.
Revealed by The Australian Financial Review, it is understood has learnt the work is being undertaken by at least three ministers – Treasurer Josh Frydenberg, Small and Family Business Minister Michaelia Cash and Assistant Treasurer Stuart Robert, with Mr Morrison taking a personal interest.
As allegations increase about banks being more reluctant to lend to small businesses, the government is analysing innovative financing options, according to senior sources in government and industry.
Under consideration is a government-endorsed finance vehicle for small and medium enterprises (SMEs), similar to those in Britain and Canada.
Britain’s £2.5 billion Business Growth Fund was set up in 2011 to offer growing small companies and entrepreneurs long-term, patient capital. The fund makes minority equity investments of £1 million to £10 million in promising SMEs. The fund, financed by Britain’s five big banks, receives government concessions, such as lower regulatory capital requirements for lending to small firms, to make the loans more economically viable for the vehicle.
Another related option is to help pool small business loans in a securitisation vehicle so investors such as superannuation funds can gain exposure to SME credit, according to financial sector participants who have discussed options with the government.
On tax, the new Assistant Treasurer is working on ways for small business to resolve tax disputes with the ATO in a simplified and streamlined fashion.
“There are some things we are going to do in terms of looking at better ways for taxpayers to sit down with the Tax Office,” Mr Robert said. “And look at how they can resolve disputes a bit more amicably.”
Mr Robert said he had told the Tax Office to act with more “grace” towards small business, though still in accordance with the law and fairness.
Senator Cash also told a Senate hearing last week that cabinet discussions were continuing about potential ways to improve access to capital for SMEs.
Business Growth Fund
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell proposed the government should consider establishing a Business Growth Fund based on the British model.
Ms Carnell said on Sunday the government and the Australian Prudential Regulation Authority needed to assist the private sector set up a fund for banks and superannuation funds to lend to growing SMEs.
“It’s not going to happen unless APRA gives this product a decent risk weighting so cost of capital is kept under control and the government needs to provide leadership,” she said.
Separately, the British government has also injected £2.5 billion for the British Business Bank.
Leading to the Election
Some people in the Coalition see small business as an important source of voters during the election.
Labor has tried to paint Mr Morrison as a creature of big business, after his repeated opposition to the banking royal commission before he backflipped as treasurer in December.
The Coalition has already committed to bring forward SME corporate tax cuts, as revealed by the Financial Review in September.
At present, the tax rate for companies with annual turnovers capped at $50 million has been lowered from 30 per cent to 27.5 per cent. It is scheduled to drop to 25 per cent by 2026-27. The government will bring forward by five years the plan to drop the rate to 25 per cent. Under the fast-track plan, the rate will fall to 26 per cent in 2020-21 and 25 per cent in 2021-22.