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30 March 2017

KOCHIES BUSINESS BUILDERS – INTERVIEW WITH DAVID KOCH

E&EO…

Subjects: Small business exporting, ASBFEO Payment Times Inquiry.

DAVID KOCH: But first up tonight Kate Carnell joins us, the Small Business and Family Enterprise Ombudsman, she’s speaking in Canberra tonight.  Kate joins us now, Kate welcome back to the program.  Who are you speaking to tonight?

KATE CARNELL: Talking to lot of accountants I suppose and small business people at the National Press Club and looking at trade and the future of trade and how small business fits into that space.  It’s a really really interesting area because the stats show pretty definitely that for those small businesses that are exporting they’re more likely to be growing and employing and really making their business buzz and of course more and more small businesses are doing just that.  By the way the company you just mentioned; Four Pillars Gin are extraordinary, they’re one of those companies and they also do some very good gin I have to tell you.

DAVID KOCH: (Laughs) Kate showing your preference there a bit like the Queen, loves a bit of gin on a regular basis.  Technology makes it so easy for small businesses to export now too doesn’t it?  It’s not just the likes of BHP and iron ore.  Premier Li, the Chinese Premier was out here last weekend with trade talks using things like Alibaba and online platforms to sell direct to China and these consumers; it’s just making it so much easier.

KATE CARNELL: It is and what it means is that even for really quite small businesses they can start selling their products and just last year the number of small businesses that were exporting rose quite significantly across Australia from about 11 to 15 per cent.  In some states like Victoria 22 per cent of small to medium businesses exported last year so we’re starting to see more and more businesses do that and apart from growing and employing more people the productivity is higher, they’re paying higher wages, they’re more likely to be sustainable in the long term.

DAVID KOCH: Yep, exactly right.  We got you back on because a couple of weeks ago you were talking about this inquiry into the timely payments to small business owners and that a lot of big businesses are dragging the chain in the terms of payments.  You’ve got an inquiry into that – give us an update.

KATE CARNELL: We’ve now had over 3,000 small businesses contribute to this inquiry which is huge and what we’ve found – and I have to say this has changed over the time of the inquiry – we’ve found that an increasing number of multinational companies are now moving to 120 days and even longer in some cases as part of their standard contractual terms.  Now I thought there was one or two just to start with; there was just a few bad eggs in the basket shall we say, but now it looks like it’s becoming quite endemic and it’s being seen by lots of those multinationals as a good business decision to improve their cash flow . That’s a real concern.  If you pay small businesses, or middle sizes businesses for that matter slower, they pay slower and that whole domino effect through the whole economy means the economy slows down. 

DAVID KOCH: What can we do about it? What are you finding is the best solution for this?

KATE CARNELL: What we’re finding really unfortunately I have to say is a lot of those multinational companies are saying that really unless there’s regulation in Australia along these lines they’ll continue to do what they’re doing so I think we’re going to have to have a look at the sort of things that are being done in the US and the UK and that’s with a level of government leadership.  In the US they moved from 30 days to 15 days for all small businesses or businesses paid by government and then they moved to say that if you had a contract with the government no matter how big you were you had to undertake to pay your subcontractors and customers in the same sort of timeframe.  Harvard Business School did an inquiry into this and they found it delivered 75,000 jobs to the American economy and $6 million to the payroll of American businesses.  The EU was legislated in the space as they tend to do and in the UK they’ve got a prompt payment approach and again governments leading saying they’ll pay 80 per cent of their small businesses within five days which is pretty cool and the rest within 30 days and they’ve also got requirements in place that…

DAVID KOCH: So you’re going to be recommending to Government that we introduce those sorts of measures here?

KATE CARNELL: We will.  I hoped initially we could go to a voluntary code.  Everyone would sign up and do the right thing but I’d have to say we’ve looked around the world at voluntary codes and the good guys sign them and the others just say “no, look decisions are made at head office in the US and we’re going to continue what we’re doing”.  If we want the economy to grow we’ve got to churn the money, we’ve got to turn it over and without that we’re in trouble really. 

DAVID KOCH: Kate, keep us up to date.  We’ll back it 100 per cent and good luck with the speech, I know you’ve got to go, appreciate your time.

KATE CARNELL: Thanks.