TRANSCRIPT
Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Stephen Cenatiempo.
Radio 2CC Canberra
Subject: 2025-26 Federal Budget, instant asset write-off, insolvency, small business conditions
Stephen Cenatiempo
Businesses are on their knees, and they desperately needed relief too. Bruce Billson is the Australian Small Business and Family Enterprise Ombudsman and joins us now. G’day Bruce.
Bruce Billson
Steve, morning to you and your listeners.
Stephen Cenatiempo
What did you make of the budget last night? What was in it for small business?
Bruce Billson
Oh, I don't think there'll be many small businesses punching the air today, Steve. I think they were looking for, you know, a real plan that said, this is how we're going to recover so many small and family businesses. Here’s key measures that will really change the setting, improve the trading conditions, make the environment more supportive after quite a period of challenging times. That recovery plan, I think, was what people were looking for.
There's a little bit of relief from the measures that you just touched on. Energy bill relief - I mean, that's not going to, you know, shift the dial much but I don't think it'll be sneezed at either at a time when small businesses are really struggling. Margin squeeze - Consumers are keeping money in their pocket and dialling back on it, on discretionary expenditure. And with many small businesses just struggling to keep their heads above water right now.
Stephen Cenatiempo
Because I made the point earlier this morning that, you know, things like, you know, chicken’s gone up so many per cent, coffee’s gone up 10%, bread’s gone up 21%. All of this is hitting small business as well as it hits consumers. But you talked about that energy rebate and for every average consumer might see some relief out of that but most businesses spend about four times as much as consumers on energy. And it's not just electricity. Your gas bills have gone up as well. Rents have gone up. Everything is going up.
Bruce Billson
Yeah, and that's the thing that businesses are pointing to, that you know what’s more widely discussed is cost of living pressures and everyone knows how that's hitting households. They’re cost of doing business pressures, amongst small and family businesses.
And you’re right, the energy has gone up eye watering numbers. You know, we were arguing some decisive action on insurance. I mean, the insurance that small businesses are having to pay is really quite crippling for some. Unlike households who make that courageous decision, Steve, to under insure or maybe not insure at all, you don't get that choice when you’re a business.
You've got to have certain insurances, otherwise you won't engage in trade and commerce, it’s as simple as that. So (an) unavoidable pain point, and there are many at the moment, and that's what people are hoping for. You know, a sign that, you know, some decisive action will lift them out of this troubling period post-COVID.
Stephen Cenatiempo
It points to a broader problem is that the lack of productivity has been a problem in Australia for years now, and we're seeing that go backwards. This was an opportunity to improve productivity by getting small business back on track.
Bruce Billson
Oh, absolutely. And the thing that's often missed is we've been sleepwalking into a big corporate economy. The share of GDP produced by small business, Steve, let's celebrate the 33% of GDP that small businesses contribute. That's fantastic. But fifteen years ago,it was 41%. You know, the two in every five private sector jobs that, you know, small businesses make possible. That's super. And that deserves to be the point. But it was 1 in 2, not so long ago.
So we're seeing small businesses, you know, shrinking as a share of the overall economic pie. And there's complexity, challenge, disruption, all sorts of things going on in the business environment. So even things around the regulatory burden, you know, many talk to me about how it's no fun anymore, that they’ve got so much compliance.
The joy that they used to get isn’t there. There was a chance to reboot a renaissance in right size regulation. The incentives that are there to say to someone, hey, take this chance, make your own livelihood opportunities and help create those for others.
We don't even know what's happening with the instant asset write-off. There was no significant signal that said, gee, we really value what we do. We know you’ve gone through a tough time, insolvencies are at record highs, although arguably, admittedly, as a percentage of operating businesses is not as high as it's been. But every one of those insolvent businesses is a tragedy and story of disappointment for the people and the families involved.
I guess they were looking for a signal to say, hey, we hear you, we see you, here’s a really positive, constructive action plan to get you back on track and contributing all you can. But I guess we'll have to wait to see what comes through the election cycle now.
Stephen Cenatiempo
I want to touch on two things you mentioned. The instant asset write-off - when we spoke to CPA Australia yesterday, they talked about the need for businesses to embrace technology to improve their efficiencies. Now, the instant asset write-off was an opportunity for businesses to invest in technology and other things of course. The fact that we don't know whether that's going to continue or not, that's a massive anchor on trying to move that, make that transition on a technological basis.
Bruce Billson
You're absolutely right, and let's remember last year, Steve, it passed the parliament with like 48 hours to go. And there were other measures, important and I think welcome measures to encourage businesses to invest in energy efficiency, products and systems for their business, you know, photovoltaic systems, batteries. That was a good measure.
But because it was a new measure, no one knew quite what was eligible and what wasn’t. Well, that legislation passed with 48 hours of the financial year left. I mean, how are you going to go and source a new solar system to put on top of your business premise? They have to it up and have it, you know, as the tax office requires, installed, operating or ready to operate in 48 hours.
I mean, come on, that's not taking it seriously. And that's why predictability around incentives is important, that people can plan for the actions they're going to take to get their mojo back and get, as I say, energised enterprise. They can really, you know, invest so that they can lift productivity, they can succeed in an increasingly challenging environment.
And let's not forget the complexity for many small businesses, and the point that was made in your interview yesterday, investing in digitization and digital technologies, that is dealing with the business of running the business, so you've got more time to delight customers, to think of new ways of creating value, new ways of driving the business forward and even reaching new customers through those digital channels.
So that's really important. And a lot of people were saying, where's the incentive there to invest in that kind of business-enabling, business-electrifying investment. So that's what people are looking for. It wasn't there in the Budget and now all are hoping that small business is the key battlefront for the upcoming election, because it's so vital to our economy.
Stephen Cenatiempo
Bruce, you mentioned insolvencies too, and there's always going to be an attrition rate in small businesses. Some small businesses should never have started in the first place, but we're seeing otherwise viable small businesses go under at the moment because of these pressures. And the mentality that small business owners are millionaires. They can look after themselves, but that's not the truth.
And I think we need to be aware of the fact that small business owners are just like the rest of us, doing their best. And even the ones that are otherwise successful are struggling at the moment.
Bruce Billson
Well, let me share with you and your audience Steve, some red hot facts.
Last full year of taxation information, 46% of incorporated small businesses did not report a profit.
For the million and a half small business owners that are self-employed, independent contractors and that, that is their full-time livelihood endeavour - three quarters of that group, Steve, take home less than average weekly wages.
The average age of a business owner is 50. 8% are under 30. Where's the young people? Used to be 17%. And just last year and the full year’s figures, it was the lowest percentage. It's 3% of non-employing businesses taking on their first employee.
So, I mean that picture says well where is that engine room of the economy? We need to make sure it's firing on all cylinders because that's vital for livelihood, the vitality in our communities. And if you happen to be living in a community where you don't have a big government department, a big corporate or a big mine, guess what the economy is? It's small and family businesses and they deserve wind in their sails, not just little things that reduce the wind in their face.
Stephen Cenatiempo
I couldn't have said it better myself. Bruce, great to talk to you this morning.
Bruce Billson
Take care sir.
Stephen Cenatiempo
Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman.