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A year when small business took some big hits

AFTER a year some small business operators would rather forget, hopes are high that solid Christmas sales will help remove some of the pain.

But there are two major hurdles awaiting them in 2002 – industrial relations and workers’ compensation law changes.

Small businesses got off to a bad start due to the still relatively unfamiliar Business Activity Statement that fell due in January. Cashflow problems from the previous BASs were starting to hit home and business confidence was heading south.

The sector stumbled from one crisis to another, with prominent corporate collapses and the September 11 terrorist attacks on the US wreaking havoc.

The home-building sector – one of the main drivers of economic success in the early part of 2000 – was in a huge post-GST slump.

The WA election also added a slight touch of the brakes to an already slowing economy.

Then came the effect of the collapses of insurer HIH and, to a lesser extent, retailer Harris Scarfe.

HIH dealt many small businesses a blow because it held a lion’s share of the workers’ compensation and builders’ insurance policies.

Things started to look up by the middle of the year with the Federal Government announcing an extension to its first homebuyer’s grant, which added a financial bonus for people choosing to build. This brought some stimulus to the languishing building sector.

The GST had become less of an issue as most small businesses had come to terms with their reporting requirements.

The reporting was even be-ginning to give small business owners some useful information on how their business was travelling.

However, the Alienation of Personal Services Income pro-visions that came into effect on July 1 caused contractors some real headaches.

The alienation provisions threatened to force contractors earning more than 80 per cent of their income from the one source to be treated as employees for tax purposes.

Even this added burden seemed to do little to snuff out the confidence that was returning to the small business sector.

But as small business owners started to look forward to better times, two airliners crashed into the twin towers of the World Trade Center, a third hit the Pentagon building and a fourth crashed in Pennsylvania.

The next day Ansett went into administration.

Then, as businesses were starting to come to terms with those events, the Federal election rolled around, again stalling business activity.

Surrounding all of these events has been a global economic slow-down that Australia seems to have ridden out surprisingly well. However, if the slowdown continues the outlook for small business will be bleak.

Combined Small Business Associations of WA president Oliver Moon said this had not been a great year for small business but the prospects remained good.

“One good thing for small business was the continual dropping of interest rates, coupled with a low inflation rate,” he said.

“But there are dark clouds on the horizon, such as workers’ compensation and IR legislation changes.

“I see the potential for substantial cost hikes to small business in both areas.”

WA Retailers Association chief executive officer Martin Dempsey said the impact of September 11 had been surprisingly severe and immediate.

“The damage to the global economy from that day seemed to catch us all napping. There has been huge collateral damage to small business,” he said.

“There are going to have to be some stimulatory measures coming on stream early next year to get business going.”

WA Small Business and Enterprise Association executive director Philip Achurch said the new WA Government had not greatly changed the lot of small business.

“The new Small Business Minister Clive Brown has shown enthusiasm for getting involved in small business issues but the main ones facing us – IR change and workers’ compensation – don’t come under his purview,” he said.

Mr Achurch believes the spiralling cost of insurance premiums is a major concern for small business.

“For example, a Lotto retailer must have professional liability insurance or he can no longer be a Lotto retailer. Those premiums have gone up 58.2 per cent this year,” he said.

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