The new Labor government’s plans for small business

By Zilla Efrat

In its election campaign, the Labor Party made a range of promises to small business. Here’s a summary of the key ones that may benefit your business.

Noting that small businesses across the country had suffered from COVID-19 lockdowns, fires and floods, Labor promised to support them in times of crisis.

To do this, the incoming Government has said it intends to work closely with States, Territories, industry groups and communities to end the uncertainty that surrounds the extent of support small businesses can expect in times of crisis.

Labor also noted that too many small businesses are waiting over a month to get paid. To counter this, it promised to help them get paid on time by introducing a mechanism to ensure payment within 30 days. The current average contract payment time sits at 37 days – well above the 30-day benchmark.

The party observed that small businesses were disproportionately affected by higher transaction fees that eat into profits – to the tune of around $804 million a year. Because of this, it said it would reduce small business transaction costs at the point of payment with a clear timeline for implementing least cost routing or similar.

Labor also vowed to protect small businesses from unfair contract terms, pointing out that when large contractors, landlords and suppliers lock smaller players into unfair agreements, it is bad for business and highly distressing for those involved.

Currently, if a term in a contract signed by a small business is found to be unfair by a court or tribunal, the clause will be void and the small business will no longer be required to comply with it. But Labor noted that there were no rules against including unfair terms in the first place and no penalties when they are discovered.

As a result, the party said it would make unfair contract terms illegal for businesses with fewer than 100 staff or a turnover of less than $10 million.

Once dodgy contracts were against the law, the Australian Competition and Consumer Commission would be able to issue civil penalties against those who use them.

It would also mean that a contract term that is judged to be unfair will effectively be banned from that point on and will be void anywhere it’s been used.

With eight out of 10 small businesses finding government regulation overly complex, Labor has also pledged to drive a genuine collaboration to reduce the time small businesses spend doing taxes, cut paperwork and target support.

The party added that it would also draw on its history of working with unions, workers and industry to deliver better outcomes with settings that are simpler, more accessible and fair.

The incoming Government will also work towards maximising small business participation in the Commonwealth government’s procurement programs.

According to Labor, government spending on contracts totalled nearly $190 billion over the last three financial years. The new government says it plans to maximise the use of Australian-made goods, products and materials in Commonwealth contracts as it rolls out its plans to invest in a Future Made in Australia.

Labor has also pledged to help small businesses facing staff shortages through its Start-up Year initiative. This aims to potentially create 2,000 new firms by offering income contingent loans to 2,000 final year students and recent graduates to support their participation in accelerator programs.

Labor has launched Fee-Free TAFE to address skills shortages and Cheaper Child Care to remove barriers to returning to work. It says it will also train thousands of workers by ensuring one in ten workers on major government projects is an apprentice, trainee or cadet.

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