The Australian economy continues to send mixed signals regarding its direction, with CBD Unit prices in Sydney and Melbourne cooling considerably, with drops of up to 30% being noted in Melbourne, unemployment falling further last month to 5.7% and serious questions being raised internationally regarding Australia’s AAA credit rating.

A double dissolution has the country returning to the voting booths, with the Labor party reflecting a recovering lead in the polls and a possible loss of the tax and investment incentives in technology, but flagging a review of the banking system and government structured support for Australia’s starving steel industry (among many other promises from both parties). Ultimately the long lost question will remain, it appears, unanswered – what incentives are there for the small to medium enterprises/businesses of Australia.

Small businesses (businesses employing between 1-20 staff) account for 44% of all private employment in Australia , with medium size business accounting for 24% – this represents an incredible force of 68% of all employees in Australia and a large chunk of tax paid via employees PAYG. An astounding number when it is considered how much ‘airtime’ this subject receives from politicians today (if you spend more money and you operate a business earning less than $2million).

However, like stamp duty, it is unlikely we will see a huge change in this area while such a huge amount of revenue is generated from it for Governments to survive off. It is very important for small to medium businesses to consider these statistics, their presence in the economy of Australia and the importance of finding good employees within a competitive market for good staff and also very important for employees to consider the importance that small to medium businesses reflect in their seeking of stable positions.

Ultimately an important lesson should be heeded from these statistics – tax is a cost to small business and to their employees (and individuals) that should be managed effectively, planned for and adjusted for. Ultimately, whichever way the economy goes, it is important for all small businesses to focus on new directions and opportunities to minimise costs and improve revenue and with this, it is important for employees to always consider developing opportunities for their employer and as such for themselves.

The current economy still reflects a great opportunity for growth, with low interest rates and strong employment (compared to historical values). For small businesses, it is not so much a time of looking to spend, but one to look towards capturing larger portions of markets through acquisition and expansion. Alternatively, small businesses and individuals should be considering making use of low interest rates to consider borrowing to expand investment diversity and as such reducing risk and increasing revenue and capital growth above interest cost. However, any investment or capital acquisition should always be kept in a liquid position (or you should simply be ready to sell) to ensure that if interest rates increase, assets can be liquidated to reduce increasing borrowing costs – although rates do not appear to be in a position (in most World economies) for increases today.

Yours sincerely

Ben Whitehouse