A personal view Editorial

Saturday, 01 September 2001

    Current

    The new tax system may have helped a number of proprietors better understand their own business and improve their bookkeeping skills but it has not solved fundamentals such as cash flow.


    The owners and operators of small to medium enterprises, or SMEs, should light a candle of gratitude to the Queensland Liberal Party for the ham-fisted manner in which it dealt with its GST compliance following a number of fundraising functions. The GST bungling was front page news until the refugees/illegal immigrants on board the Norwegian freighter Tampa captured public and government attention – but the issue will resurface in the weeks leading up to the election. For SMEs, the GST affair is a vindication of sorts for those nights spent over the kitchen table coming to grips with the BAS forms. The issue is not whether the GST was wrongly claimed or the fact that party officials including Small Business Minister Ian Macfarlane (see cover story) made a mish-mash out of explaining what they knew and when they knew it. But it should be salutary lesson for both sides of politics in understanding that legislation and tax reform have real consequences beyond the corridors of Parliament House. Real people running real businesses have to cope with changes that have often been devised in the reality vacuum of Canberra. Government bureaucrats do not have an intrinsic loyalty or duty to the Australian people. The performance of their duty is strict adherence to departmental guidelines.

    The relationship of government department to minister often resembles an episode from the British TV series Yes, Minister. During the past year, numerous ministers have been caught out by the incompetence or recalcitrance of their own departments. It is why the GST affair has brought a wry grin to the faces of Australian small business owners who will be entitled to say that if the Government doesn't understand its own rules how does it expect them to? While that is understandable, it doesn't solve the problem. There is no going back on tax reform. The GST is here to stay. What is needed is for this incident to be used to hammer home the point that government – and bureaucracy – need to devise a better consultation process whenever changes are needed. In some areas the Government has performed very well, particularly with the Corporations Law and the Financial Services Reform Bill. It is useful to note that the FSR Bill has now been delayed from its original start-up date of October 1 to March 11, 2002. The delay will allow the Government to train its staff and ensure that the systems are working. The new regime will include a single licensing disclosure and conduct framework for all financial service providers, streamlined regulations for financial markets, clearing and settlement facilities and new complaint mechanisms.

    If the Government had used similar consultative processes then the original BAS form would not have been such a compliance nightmare for small business and an administrative burden for the ATO. No matter how it is measured, SMEs represent a huge part of the economy. They are the engine of growth and jobs. Their only failure is that they haven't learned to speak with one united voice and to use their potentially considerable influence effectively. The assumption in Canberra by both sides of politics is that SMEs are core Liberal voters. It means that this sector is taken for granted whenever the subject of small business comes up. Politicians pay more attention to the big end of town which can influence the only game that matters – publicity. If the CEO of say BHP or Lend Lease castigates government performance it is front page news. If the owner of a small business, wants to do the same thing, his view will rarely, if ever, see the light of day. But make no mistake SMEs are not happy. The latest Yellow Pages Business Index report shows SMEs are worried about sales, cash flow and the GST. The new tax system may have helped a number of proprietors better understand their own business and improve their bookkeeping skills but it has not solved fundamentals such as cash flow.

    Only 19 percent of the 1800 businesses surveyed thought government policies were helpful, while around 40 percent thought they were working against them. Admittedly this was an improvement on previous surveys. Small business is about to make a big impact on the next election.

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