Dynamic Business looks at what the campaigners have in store for small businesses ahead of the federal election on May 21.
In the first edition, we examine Anthony Albanese’s labor party, which bills itself as “the party of small business.” We’ll try to break down the policies they’ve stated they’ll try to fix.
Let’s go over them one by one.
“Reduce small business transaction costs at the point of payment with a clear timeline for implementing least-cost routing. Small businesses are disproportionately impacted by higher transaction fees that eat into profits – around $804 million a year.”
In September last year, treasurer Josh Frydenberg pressed the Reserve Bank of Australia to lower expenses for small businesses by requiring commercial banks to provide cheaper debit card solutions to consumers making tap-and-go payments in stores.
Debit card costs for Mastercard/Visa are on average 0.5 per cent, compared to 0.3 per cent for eftpos. According to official statistics, small businesses suffer greater fees on average.
Meanwhile, the present government has said that it aims to implement least cost routing for tap-and-go debit transactions so that commercial merchants can avoid paying higher fees by using the relatively cheaper domestic eftpos system.
However, as Ben Kearney, CEO of Australian Lottery and Newsagents Association (ALNA), pointed out: “A significant missed opportunity in this budget was a commitment to make least cost routing of small businesses payments mandatory.
“This is something that we have been seeking because we know the impact it will have on the cash flow of small businesses. Where merchants can have reliable control of payments routing, they can significantly reduce costs. Protecting this is critical to reducing inflationary pressures on payment costs,” he said.
Read more here.
“Ensure small businesses are paid on time to sustain growth across the economy with a mechanism to ensure payment within 30-days. The current average contract payment time sits at 37 days – well above the 30-day benchmark.”
Scotpac, a large independent finance provider, estimated that the cost of delayed payments in 2019 was around $234.6 billion in lost revenue. SMEs would have generated more revenue if cash flow was improved, as late payments accounted for a 43% downturn in cash flow.
Similarly, a 2019 report from Xero, the global small business platform, revealed for the first time the magnitude and impact of late payments to Australian small businesses, putting the value of outstanding late payments at $115 billion a year.
The research found that half of all trade credit invoices were paid late. Solving it would see small and medium businesses benefit by $4.38 billion over ten years.
The Australian Small Business and Family Enterprise Ombudsman, in the Review of payment terms 2019 report, said, “It appears as though large Australian companies and multinationals apply these policies to improve their working capital efficiencies at the expense of their suppliers.”
Last year, the new Payment Times Procurement Connected Policy – which goes into effect in October this year — requires businesses with an annual income of more than $100 million that are awarded government contracts worth more than $4 million to pay suppliers’ bills (up to $1 million) within 20 calendar days.
Read more here.
“Drive a genuine collaboration with small businesses and government to reduce the time small businesses spend doing taxes, cut paperwork and target support. Eight out of 10 small businesses find government regulation overly complex.”
The increasing ATO compliance activity aimed at businesses is one contentious issue raised by businesses, according to the KPMG survey. Earlier, the Morrison government said it would give eligible businesses the option of reporting taxable payments system data via software.
Businesses that choose automatic reporting will no longer have to fill out the annual Taxable Payments Annual Report. New systems are expected to be in place by December 31, 2023, with implementation beginning January 1, 2024.
In addition, the government said it would create systems to allow all trusts to file income tax returns electronically. The ability to pre-fill beneficiaries’ tax returns will be created by digitising the reporting of trustee and beneficiary obligations.
Read more here.
The party has said that the cost of these measures will be met from within existing resources. In addition, the ALP said that they would maximise small business participation in Commonwealth procurement, providing greater opportunities for business and Australian jobs.
“The Commonwealth can use its $190 billion purchasing power to support small businesses, delivering better value for money and grow the local economy to build a Future Made in Australia.”
These measures aim to make it easier for small businesses to bounce back from the ongoing pandemic and recover from the bushfires and floods that have ravaged parts of Australia.
“After nine long years, too many small businesses wait over a month to get paid. Eight out of ten find regulation unnecessarily complex, one in four cannot find skilled staff, and too many fees are being unnecessarily pinched at the counter,” ALP said.
“An Albanese Labor Government will deliver a Better Deal for Small Business, providing certainty to the small business community in times of crisis, ensuring they are paid on time, cutting transaction fees at the point of payment, and making government work for small business.”
Here’s the official statement from ALP.
Other Labor policies.
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This post was aggregated from Dynamic Business (https://dynamicbusiness.com).