Special Report - Playing politics with business

Pledging support for small business has long been a staple of election campaigns, yet the changing composition of the workforce and of small business calls into question the traditional approaches. Mark Beyer, Julie-anne Sprague and Dave Gibson analyse the issues.

In a rare moment of candour after last year’s Federal election, former Labor leader Mark Latham acknowledged that his party’s policies had failed to keep pace with changing society.

He called on Labor to make a philosophical shift to embrace “the upwardly mobile”.

“The new middle class is here to stay with its army of contractors, consultants, franchisees and entrepreneurs,” Mr Latham told the Fabian Society.

“This reflects the decentralised nature of the modern economy … people have broken free from hierarchical organisations and become agents of their own future.”

Mr Latham may be history but the challenge he outlined remains equally valid for policy makers and politicians, State and Federal, Labor and conservative.

For Labor it’s about responding to the seismic shift in society, as tens of thousands of people have gone from being employees of private sector companies and government agencies to being self-employed business operators.

With this change comes a new mindset. They don’t think about joining trade unions to fight for improved wages and conditions; they think about building their own business.

The emergence of thousands of enterprising small businesses – the contractors, consultants and entrepreneurs – also presents new challenges for the avowed supporters of small business, such as Western Australia’s Opposition leader Colin Barnett.

Combined Small Business Alliance of WA chief executive Oliver Moon, who speaks on behalf of 33 member associations, agrees that the business landscape has fundamentally changed.

“The whole landscape, the traditional thinking of what a business is and where it should operate, has totally changed, totally blurred, and it’s forever changing,” Mr Moon said.

He said this was a challenge for policy makers at State and local government levels.

“Policy lags behind what, in fact, is happening and what the needs are.”

Mr Moon noted that home-based business has been a major growth area, but this category did not simply cover small business.

“I don’t draw a distinction,” Mr Moon said. “I know cleaning contractors who have 80 to 90 to 100 employees who run their business from a home office.”

However, a key distinction is that new businesses are a product of the times; mostly they have emerged in areas free of government regulation.

This contrasts with traditional small businesses that have grown up in a world where market regulation was the norm, and which consequently have a strongly protectionist streak.

This is illustrated by the current debate over retail trading hours.

The biggest noise in the debate is being made by business people with the most to lose – the independent supermarket operators, who currently have a regulated monopoly on weeknight trading and Sunday trading.

The Coalition has embraced this constituency, urging Western Australians to vote ‘no-no’ in the upcoming referendum on shopping hours.

“Deregulation of trading hours will only deliver the big end of town a bigger market share and will be devastating to the rest of the sector,” deputy Opposition leader and small business spokesman Dan Sullivan said.

The sternest critic of the Coalition on this issue has been the Chamber of Commerce & Industry.

CCI chief executive John Langoulant said the CCI’s policies promoted the best interests of all businesses, contrary to the critics who say the CCI is sticking up for big business.

He said the Coalition’s policies “have been inclined to pander to vested interests who profit from current restrictions”.

Mr Langoulant has called on the Liberal Party to stand by its avowed commitment to “individual freedom and free enterprise”.

Mr Sullivan argues the Coalition’s real focus is on creating a level playing field so that retail businesses can compete with the likes of Coles Myer and Woolworths.

More generally, he says a future Coalition government would take up the fight on behalf of small and medium-sized enterprises (SMEs) that feel aggrieved by their dealings with large organisations, including government agencies such as Western Power.

“One thing that comes through repeatedly from SMEs is they want a champion, someone who will stand up for small business,” Mr Sullivan said

But Mr Sullivan declines to explain how a future Coalition government would deliver on this idea.

Australian Democrats WA senator Andrew Murray also says small business wants “a genuine fair go”.

“They want a free hand to pursue their business and an ability to survive an extremely predatory environment,” Senator Murray said.

Specifically, he said, competition policy and trade practices law needed to be tightened to offer better protection for small business, which he said couldn’t be viewed like large companies.

“Small business has a value of itself. It is not just an economic unit but it’s also a social and community unit,” Senator Murray said.

Tim Mazzarol, associate professor in the graduate school of management at the University of Western Australia, believes there is a lack of information about what small business operators really want.

“When you see the rapid growth in home-based businesses it’s hard to deal with that from a policy perspective,” Mr Mazzarol said.

He said that while the small business sector included a widely diverse range of businesses, there were some common themes.

“The size factor does make a difference. Being small, they are often facing the same management issues.”

In particular, he said, many small business operators learned on the job and had limited technical and management skills.

Curtin University’s Tim Atterton, director of the BankWest entrepreneurship and business development unit, believes more support for established small businesses, including through management training, could have an enormous impact in terms of stimulating activity.

He said another barrier to faster growth was the shortage of skilled labour, an issue that cuts right across the business community.

The Small Business Development Corporation has responded to the diversity within the business sector by targeting programs at specific segments, such as exporters, women and young business people.

In terms of State politics, the Coalition has clearly chased the ‘small business’ vote more energetically than Labor.

The current minister, Labor’s Bob Kucera, is generally seen to have a greater focus on his other portfolios of sport and tourism.

WA Business News requested an interview with Mr Kucera but was told he would not be available until Labor’s small business policy is launched later in the election campaign. However, to a large degree, the activities of the minister for small business – whoever fills the role – are a sideshow.

The big game is in other portfolios governing key issues such as tax, industrial relations and competition policy.

They repeatedly top surveys as the key issues facing business, and help explain why the Gallop Government is on the nose.

It has presided over increased taxes and gone against the national trend by returning to a less flexible industrial relations regime, and it is no coincidence that these are two of the key business issues on which Colin Barnett is campaigning.