Small business and entrepreneurship is at an all time low and calls for urgent action. The Institute of Public Affairs (IPA) latest Parliamentary Research Brief (PRB) outlines Australia’s small business crisis. The PRB contains statistics that prove that small business is in the worst slump of the last 20 years. With the decline in start-ups continuing to plummet, the IPA has presented three policies that should encourage small business growth.
The IPA is a conservative public policy think tank that aims to preserve Australia's economic foundation. They release PRB's to provide politicians and policymakers around the country with succinct information on various policy areas. Their latest release is about solving Australia's #smallbiz crisis. They distributed the research to all Australian parliamentarians with a strategy for how to achieve the creation of 250,000 new small businesses over the next five years.
According to the PRB, the percentage of workers employed in small businesses declined to 44 per cent in 2017 from over 50 per cent a decade ago. It also reveals that the rate of owner-managers with employees has fallen from eight per cent to six per cent. This shows that not only are fewer Australians working in small business but that fewer Australians are self-employed.
This decline is alarming because it will significantly impact the country's economy. Small business stimulates the country's economy by providing employment opportunities and bringing growth and productivity.
In a bid to remedy this crisis, the PRB provides three strategies that could potentially turn this around.
Firstly, it suggests cutting red tape. The IPA found that red tape is particularly burdensome on small businesses and costs the Australian economy $176 billion a year.
The second suggestion is to liberalise Australia's industrial relations system. It suggests that this would make it easier to create jobs.
Lastly, the PRB asks for a reduction of the two-tiered corporate tax rate by 25 per cent, because the tax discourages growth.
The two-tiered tax system is double-dipping and a non-creative way for the government to source income.
Glenn Talbot from GTS Bookkeeping says that "the two-tiered tax system is archaic. I know it's the government's way of erasing revenue, but it shouldn't be at the expense of crushing business owners."
The renowned business development consultant also suggested ways to stimulate small business growth.
"Offer tax breaks for businesses in their first three years when they're at their most vulnerable and incentives to employ people."
"Provide the people you employ with incentives to upskill. Make a training program available to them, so they don't have to jump through hoops. It will benefit everybody because then we've got people with more knowledge,”
“It shouldn't be just about upskilling the unemployed, upskill those already in business too."
However, when it comes to the big picture, Glenn believes that it ultimately comes down to the government.
"We need to elect politicians that are genuinely interested in small business growth. Interested enough that they're able to see the growth barriers and how to overcome them."
With any luck, the government will respond to these startling figures and put a plan into action as soon as possible.
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