Andrew Charlton (Parramatta, Australian Labor Party) Share this | Hansard source

The two previous speakers, the member for Bennelong and the member for Wentworth, have both described the important role that small business plays in our economy, and I associate myself with those remarks. Ninety-eight per cent of all businesses in Australia are small businesses, and those businesses employ more than 60 per cent of working Australians and account for 50 per cent of Australia's GDP. The key thing for me, though, is the difference between those last two numbers: they employ more than 60 per cent of Australians but account for only 50 per cent of GDP. The reason there's a difference between those two numbers is that there's a productivity gap between small businesses and large businesses.

Small businesses are on average about 10 to 15 per cent less productive than larger businesses. That means that, per employee, the added value produced by our small business sector is much lower than the added value produced by our large business sector, and that, to me, speaks to an opportunity. If we can lift the productivity of those small businesses up to the national average, we would make a huge difference to our national productivity challenge.

What are the things that are holding back small business productivity? Everybody in this place who regularly meets with small businesses and goes down to visit them in their shops and offices and places of work knows how hard it is to be a small business in Australia. They know the challenge of meeting payroll and the difficulties of managing all of the government regulation associated with employment, compliance, tenancies and occupation. They know the stress that so many small businesses are facing right now, at a time when not only are revenues soft but costs are rising. We talk about the cost-of-living challenge in Australia. So many families are experiencing rising costs, but the small businesses of Australia are not just feeling those rising costs—rising costs of inputs and labour and materials and rent. Unfortunately, they're also feeling the other side of that coin, which is falling sales as the economy softens. Small businesses are caught by both blades of the scissors. That's why now is such a good time to think about what we can do to help small businesses in Australia, not just to help them through a very difficult time in our economy but also to realise that largest of economic opportunities that Australia has: to close the gap between large and small businesses in terms of productivity.

For a long time, many of the drivers of productivity in our economy were the exclusive province of large businesses. Think about big ERP systems, big pieces of digital infrastructure that enabled big businesses to be more efficient, to manage their workforces better and to reach customers more easily. But, today, many of those digital tools which were once the exclusive domain of large businesses are now democratised, available to small businesses. Small businesses can use online platforms to help them manage their payroll, do their accounts and conduct advertising and marketing in low-cost online ways. The fixed costs of becoming a small business have fallen dramatically. If we think about one of the big opportunities to close that productivity gap and to boost our national productivity, it is surely to support small businesses to take advantage of these digital opportunities, to give them the same efficiency tools that big businesses have had for a long time.

As the previous two speakers also said, another important thing we need to do is help small businesses through the tax system. In the previous government, there was almost no reform to our tax system over the course of nine years. There were no changes to superannuation, no changes to many other areas of economic policies, from microeconomics to competition policy to financial services and climate change. Our economy stood still, without being renovated or modernised to keep up with the changes across businesses' experience. That lack of reform has led us to the productivity cul-de-sac that we're in today, where, over the previous decade, productivity declined to near record lows. For this government, returning productivity, both through small and large businesses, is core to our economic agenda.

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