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Former small business minister Bruce Billson retired from Parliament in July 2016, but he never quite departed the small business space.
A small business owner himself, Mr Billson runs a consulting firm that helps SMEs navigate government and big business, while also occupying a director’s role at Aussie challenger Judo Bank. But his engagement in the community doesn’t stop there. Mr Billson is a vital part of the IPA Deakin Research Centre, which brings together practitioner insights with world-class research, providing informed comment for substantive policy development.
Recently, Public Accountant spoke to Mr Billson about his work with the Institute of Public Accountants (IPA), his time in government and at the Franchise Council of Australia (FCA).
Tell us a little about your work with the IPA Deakin Research Centre?
My relationship with Deakin is twofold. One, I’m the director of small business and enterprise in the faculty of business and law, which is a part-time role reflecting my ongoing desire to do things that are supportive of small business.
The second component relates to the IPA Deakin Research Centre, where I chair the advisory council and support the centre with industry engagement, market intelligence, relationship building and strategy. It is a role I enjoy very much. The Institute of Public Accountants and Deakin University have a very positive and meaningful relationship.
It spans professional development and training, and supports the continued efforts of the IPA to work with its members and to represent the leading edge and best practice in accountancy and related professions.
You spearheaded the Abbott government’s SME agenda and recently we saw the return of small business to cabinet. Do you think the Morrison government is on the right path in regard to their work in the SME space?
I think small business is very much front and centre of the Morrison government’s forward agenda. I am pleased that some years ago I was a key part of making sure everyone understood just how crucial the contribution of small businesses is to the Australian economy, what a real driver of opportunity and employment prospects they are.
Small business is important to the fabric of all communities across Australia. That means that the entrepreneurship that we see through small and medium enterprises, and even the micro businesses, is a key factor in growth, improved living standards and prosperity for the future. I think the government is reflecting that in its decision to have small business as a cabinet portfolio, a position I pioneered. The government is crafting much of its policy agenda with small business very much top of mind.
Small business has had a tough year, what would you recommend policy focus on going forward?
I think the best thing to do is to listen with purpose and with an open mind to the small business community.
The thing I noticed most in government is that many of the challenges and opportunities faced by sectors such as agriculture or mining have a certain similarity. The beauty of small business is its great diversity. You see small business men and women engaging in the economy right across many different elements, in different ways and looking for something that is working for them.
So, when you listen to the small business community, they will give you a very clear sense of what sort of headwinds they are experiencing. They are not looking for handouts, they are not looking for kicks. They are just looking for a fair opportunity to succeed.
Governments can hopefully take the wind out of the face of small business and put it at their back, removing some of the obstacles that are standing in their way.
The government needs to always be open to the actual experience of small business in order to understand where policy renovation and innovation is needed. That is really what the research centre is all about, that link between understanding and researching what is going on in the small business economy.
The key questions include things like how is greater internationalisation impacting small business; what’s the story about accessing finance; is regulation giving small business the legitimate opportunity to establish itself and take up the fight to big businesses; are they spending a disproportionate amount of time on compliance and regulation; and, what is the wellbeing of the small business operator.
How much has changed since your time in government, particularly in terms of the focus on small business?
I think it’s been a positive trend. I know when I was shadow minister with the previous government, there was a sense that small business wasn’t top of mind, wasn’t really a leading factor in policy formation. At times small business was thought to be a shrunk version of bigger businesses.
That is not the case. The particular challenges that small business face are very immediate and can be quite different from larger enterprises. They need to be addressed in their own right to make sure the innovation, the economic growth, and I suppose the prosperity and vitality of the Australian economy, are constantly renewed and nurtured.
For small business, it is not a ‘set and forget’ policy, there is a need to constantly look for new ways to provide the entrepreneurial ecosystem that makes prospects of success more likely.
No government can make a small business succeed, but there are plenty of things governments can and need to do to make sure that every opportunity is available for small business entrepreneurs to succeed and to thrive.
In terms of access to funding, we know that this is a very big struggle for the small business community, how do we fix this?
I am pleased that some of the work that the IPA undertook, that I have been involved in, is very much at the forefront. The SME white paper that Deakin and the IPA produce every two years, focused on finance and argued for a securitisation vehicle. It has been very persuasive and it is a credit to both Deakin and the IPA. The research centre was able to do the research and bring the rigour of analysis and the clarity of policy proposals forward, which saw government embrace the recommendations.
Interestingly, the government then wanted to find that SME lenders could benefit from such an initiative, where essentially the government would buy up a loan portfolio, properly secured, very robust in its risk rating and its performance, but in doing so generate another pool of capital that could then be on-lent to SMEs looking for finance.
That is a very practical measure that the IPA has been in the vanguard of advocating. The government is doing it and now they’re looking to small business financiers, like Judo Bank, to discuss how to operationalise the idea to the benefit of small business.
Moving to your time at the FCA, what are your thoughts on the probe into the sector that has left many claiming it is a failed system?
I love franchising. I think franchising done well is the best form of entrepreneurship going around. To be in your own business but not on your own. It is actually a model of entrepreneurship that can see a whole lot of expertise, specialist skills in capacity, market knowledge, brand development, pricing, I mean a whole lot of wisdom that most small businesses cry out for can be brought into a business at an early stage and improve prospects of success.
I am incredibly optimistic about that. What I am also seeing is that the regulatory environment and the enforcement framework is very comprehensive in Australia, but we are still seeing examples where participants in the franchise sector haven’t functioned and performed to the standards that are expected of them. We need to have decisive regulatory responses to that.
We need the enforcement agencies to do what they are there to do, to make sure the codes are properly enforced. It’s also about ensuring that people thinking of investing in a franchise business understand the relationship they are contemplating entering into.
So, franchising is not for the Richard Branson free ranging entrepreneur, nor is it for a business that wants everything to be done for them. It is more your barn laid hen entrepreneur, with its bumper rails that allow them to bring their entrepreneurial A game, while being empowered by the know-how and expertise of the franchise system.
I think the probe has shown – not withstanding the very comprehensive regulatory, compliance and enforcement framework – that what’s expected of key participants in the franchise sector hasn’t been fulfilled. The redress and dispute resolution haven’t been handled in the way that they should have been.
It is also a reflection of the pointy end of what many small businesses are facing in the general economy. The bottom line is, if you don’t move with and understand the changes, and respond in a way that sees the value you provide renourished and almost reinvented, the business is going to fall behind.
Given the current economic slowdown, what do you predict for the next 12 months?
I am optimistic, because small business men and women are optimistic.
And whether you look at things like the G20 agenda, everyone is talking about the key catalyst to lifting rates of economic growth and the opportunities for livelihood and prosperity.
All of those conversations bring you back to the small business community, where people are solving problems every day and creating new forms of value. Some of the big businesses looking to grow are now looking at small business for advice.
There is a change in the way finance is being made available, interest rates are conducive, consumers are increasingly discerning and technology is opening the door to a world of delicious possibilities, of millions of new customers. Those new market opportunities are delicious. But again, they need careful thought, and that is an area where the IPA and Deakin are doing some work.
So, I am optimistic, I don’t see any free runs. I think the days of sloppy margins are behind us.