Businesses decry glaring omission from election debate

Perth Now

27-04-2025

They're called the "engine room of the economy", employing more than five million Australians, and they may have a big sway on the federal election result.
Chasing the votes of small business owners, the major parties have offered a slew of promises, from tax incentives to energy relief, but operators are largely unimpressed.
Businesses face the toughest operating conditions in living memory, and what's on offer is merely "tinkering around the edges", says Luke Achterstraat, chief executive of the Council of Small Business Organisations Australia.
A noxious trifecta of rising costs, falling discretionary spending and increased regulatory complexity have smashed business, especially in construction, retail and hospitality, Mr Achterstraat says.
"You put that all together, and it results in not just those insolvency levels, but also some small businesses voluntarily closing down because they have had a gutful and find it very difficult to remain profitable," he tells AAP.
James Thorpe is the owner of Odd Culture Group, a Sydney-based hospitality team which boasts the likes of heritage boozer the Old Fitz and late-night music hub the Duke of Enmore in its stable.
"Our spend per head across the group went down dramatically 1.5-2 years ago when interest rates started going up really quickly," Mr Thorpe says.
Meanwhile, the cost of doing business has shot up.
Rising rents, wages, electricity prices and alcohol excises have taken a chunk out of profit margins.
Labor has offered energy rebates and a freeze on the draught beer excise, while the coalition is promising more gas to lower baseline energy prices.
Largely absent from the campaign conversation has been how to address skyrocketing insurance premiums, which Mr Thorpe says have doubled or tripled for some operators.
"A lot of it comes from the fact that insurance underwriters seem to have an old view of what we call vibrancy now," he says, with late-night venues unreasonably assigned higher risk characteristics.
Fewer underwriters in the late night space means less competition for public liability and industrial special risks insurance, compounding the cost.
In a statement, the Insurance Council of Australia said there were several underlying drivers behind the rise in public liability insurance premiums.
These include an insurer's access to capital and reinsurance as well as settings that govern a business's legal responsibilities, for example, if a patron is injured on their premises.
The council called for a review of civil liability settings to ensure there was a "stable and competitive public liability insurance market where businesses are able to access the insurance they need".
Rising premiums have barely rated a mention during the campaign, other than Opposition Leader Peter Dutton's threat in February to break up insurance companies that abused their market power.
But he was contradicted by shadow treasurer Angus Taylor, who said divestiture powers would be limited to supermarkets and hardware.
Mr Taylor says the coalition would help small businesses by providing tax incentives, such as a $2000 rebate for tech upgrades, a tax holiday for start-ups and tax deductions on work lunches.
Both parties have promised to extend the instant asset write-off but the coalition will go further, making it permanent and increasing the threshold from $20,000 to $30,000.
Tax incentives are welcome but they will be of no benefit to the many businesses who don't make a profit.
There's little on offer that tackles the underlying issues, Mr Thorpe says.
Hospitality businesses are particularly burdened by a labyrinthine regulatory system, comprising reams of red tape across federal, state and local jurisdictions.
Food and beverage services, along with the construction industry, account for more than 40 per cent of recent monthly insolvencies, says CreditorWatch chief economist Ivan Colhoun.
Mr Taylor points to record insolvency numbers - more than 29,000 this term - to back his claim that Labor has been the worst government for small businesses.
Mr Colhoun says this claim is misleading.
A more accurate metric is the rate of insolvencies, given the rise in businesses operating in the economy.
Treasurer Jim Chalmers pointed out 850,000 new businesses were created in the same period.
"On average, new business investment has grown 4.6 per cent under us, compared to going backwards 1.3 per cent under our predecessors," Dr Chalmers said in a debate with Mr Taylor.
As a proportion of businesses, insolvencies are lower than the historical average at 0.036 per cent. During the Howard government, the rate tended to bounce around between 0.04 and 0.05 per cent.
Insolvencies have moderated since the start of the year as interest rates began heading down and consumer confidence recovered.
But the threat of an economic slowdown driven by Donald Trump's trade war worries retail operator Sharee Potter.
As a discretionary purchase store, Little Cactus - her fashion boutique in Melbourne's eastern suburbs - is especially vulnerable to a drop in disposable income.
"I just think the government could do a lot more to support small business," she says.
"I've had to let more of my staff go and so it has flow-on effects for the community."
Complexities around pay and super regulations add to retailers' difficulties.
Penalty rates have forced Ms Potter to stop operating on Sundays, she says.
"I took Easter off this year, which I haven't done in 10 years, and normally I'd pay for staff to do Easter Saturday but it just wasn't going to be worthwhile this year.
"So I just closed for five days and took the break for my mental health, but that doesn't help your bottom line."
Employer groups have scolded Labor's promise to enshrine penalty rates in law, tying the hands of the independent umpire the Fair Work Commission and stymieing attempts to simplify the system.
"It's very short sighted by the government to politicise penalty rates on the cusp of the election," Mr Achterstraat says.
"I think it's quite cynical."
The coalition says it would wind back some of Labor's workplace changes, such as reverting the definition of casual workers and repealing the right to disconnect.
But it won't touch more contentious issues like multi-employer bargaining, having largely steered clear from fights over industrial relations since WorkChoices brought down John Howard in 2007.
Mr Achterstraat acknowledges positive moves from both parties to address over-regulation but his number-one desire is to cut the small business income tax rate from 25 per cent to 20 per cent.
"That would capture a lot of entities and allow them to keep more of their profit, reinvest that and also boost their cash flow."