The right support
Council of Small Business chief Peter Strong said the target sent the right message to people who wanted to start a small business but cautioned the conditions needed to be right to meet the goal.
Mr Strong said the “big issue we’ve got to confront is workplace relations”, which was too complicated for employers and employees.
“Without a doubt it’s ambitious but that is the sort of thing we want to hear,” he said.
“When I first saw it I thought it was going to be very hard [to achieve] but when I thought about it, with the right support behind it, it is achievable.”
Mr Strong said there also needed to be a shift to a more US-style culture, where the demise of a small business wasn’t seen as a failure but a chance to learn.
But part of this included making sure that some people who shouldn’t start a small business did not do so.
“Among these 250,000 there will be some that definitely don’t work so let’s make sure we can support people to come out the other end and start again,” he said.
Australian Chamber of Commerce and Industry chief James Pearson said three key elements needed to be met to help the Coalition reach the target.
He echoed the call for industrial relations reform, saying greater flexibility was needed to encourage businesses to hire more workers and respond to changing economic circumstances.
Mr Pearson also said the government needed to invest in skills training to ensure sufficiently qualified workers were available and also do more to tackle power prices, which were forcing some companies to shift production overseas.
“We must not be giving help to businesses with one hand and taking with another,” he said.
Both Mr Strong and Mr Pearson said the government’s promise of equity funding was welcome to help small businesses access finance, especially for those who often had little choice but to put their house on the line.
Institute of Public Affairs research director Daniel Wild claimed there was a “small business crisis” in Australia and the government needed to cut red tape.
The think tank’s recent research found a further 250,000 businesses would have opened their doors if the pre-global financial crisis creation rate had continued.
“There were 38,000 fewer new businesses created in 2017-18 compared with a decade earlier, according to the Australian Bureau of Statistics,” he said.
“Red tape and a rigid industrial relations system are the key reasons why new business investment in Australia is just 11.5 per cent, which is lower than it was during the economically hostile Whitlam years.”
Enabled by finance
Access to finance will also be key, with the government’s already-legislated business securitisation fund targeted towards funding new businesses.
Growth in lending to small business has dived, according to analysis of Reserve Bank of Australia data.
Quantum Business Finance director David Gandolfo said finance is the enabler that allows businesses to grow, invest, prosper and create wealth through employment.
“The creation of the Australian Business Growth Fund will enhance the ability of viable existing businesses to grow and invest, and will complement the Australian Business Securitisation Fund, which will come online in July and do the same for emerging businesses,” Mr Gandolfo said.
“The target of 250,000 new businesses over five years is ambitious but welcome, because it recognises that more great business plans are hatched than come to fruition, and a country that prides itself on innovation must help the innovators who then create wealth and employment for others.”