Franchise Talk

Glowing reports on regulation ignore the ugly truth

November 27th, 2006 | Author: Jack

AN international report has ranked Australia No2 when it comes to small business, while a local expert on regulation says the tax office is not as bad as we think. Wonders will never cease!

Angela MacRae advised the Prime Minister’s Department on the GST and was a member of the Reducing Regulatory Burdens on Business taskforce, chaired by Gary Banks of the Productivity Commission.

“We were surprised that the tax office does a lot better than many other regulators,” she told a Standards Australia conference in Sydney last week.

“The ATO is often a good role model.”

However, she was less charitable about the tax laws.

“Our tax act is the second-worst in the world behind the US,” she said.

The latest Sensis business index for small and medium enterprises showed confidence in the sector has improved in the three months to November, despite a 0.25 per cent interest rate hike earlier this month.

The past six months have brought a depressing run of confidence ratings for small and medium-sized enterprises. Confidence is measured by taking away the worried businesses from the confident. Net confidence is now at 50 per cent, up 5 percentage points over three months.

However, it is 9 percentage points lower than for February.

“The main reasons businesses gave for feeling confident were that they had plenty of work coming up, they were established and experienced and they were currently experiencing a good level of profitability and improving business,” the report says.

The drought’s effect on prices and the economy generally were big worries for business.

SMEs said finding and keeping staff (14 per cent) was top of the list, followed by lack of work (11 per cent), cash flow (11 per cent) and paperwork and bureaucracy (9 per cent). Fuel costs (4 per cent) and taxes (3 per cent) also rated.

Despite this, a recent World Bank study, Doing Business 2007, ranked Australia as the second-easiest country in the world in which to start a business. It was also No2 in the OECD for obtaining credit and hiring new workers.

New businesses in Australia need only two steps and two days to get going, against the OECD average of six steps and 16 days.

Small Business and Tourism Minister Fran Bailey said: “The World Bank confirms that Australia is a great place to start and run a small business. The Howard Government has made life easier for small business by delivering strong economic management, cutting taxation and reducing red tape.”

The panel at the Standards Australia event, however, did not see the red-tape situation in such glowing terms.