The Business Council of Australia (BCA) really dislikes small business. As in, really dislikes them.

The extremist lobby group that has alienated even its own political affiliates in the Liberal Party is still smarting from losing the political battle over the effects test recommended by Ian Harper in his competition policy review. After the Nationals won the day within the weakened Turnbull government, the bill to strengthen the current dead letter abuse-of-market-power provisions of competition law was introduced earlier this month, over the objections of the BCA.

Today in BCA newsletter the Financial Review, council head Jennifer Westacott complains about the possibility that the government’s $48 billion company tax cut for multinationals and large corporations (i.e. her members) will be blocked while the company tax cut proceeds for small businesses. And even under the government’s plan, which is unlikely to pass the Senate, the tax cut for big companies will be staggered, and not eventuate until small and medium businesses have received tax cuts first.

For Westacott, small business getting a tax cut defeats the entire purpose of the exercise. No, not to hand a windfall to the small number of her members that actually pay anything like 30% tax, but to magically improve workers’ lives and grow the economy. “These gains will only be achieved if tax cuts extend to large businesses,” she insists.

Small business would, according to Westacott, “also benefit most from across-the-board cuts because small and big businesses depend on each other. Business Council research indicates that the activity between businesses small, medium and large is worth around $520 billion a year.”

That is, small business would get more benefit out of big companies getting a tax cut than they themselves would get directly from a tax cut. If anything — according to Westacott’s logic — big business should be getting the tax cut first, not small business! Apparently able to increase employment, wages, growth and productivity, a big company tax cut now also delivers most of its benefits to small business as well as workers: truly there is nothing it cannot do. It’s seemingly only out of the goodness of her heart that Westacott stops short of saying small business cuts should be dropped altogether in favour of magical big business cuts.

[The Business Council: extremist, inconsistent and out of touch]

Westacott’s argument that big company tax cuts will boost jobs and the economy is the usual compilation of unevidenced assertion that the council has been offering for years — presumably Westacott’s speechwriters have all this stuff stored in macros on their copy of Word (helpfully provided by member company Microsoft). But Westacott invoking activity between small and large business raises a separate issue where: if the BCA actually gave a stuff about small business, it could actually do some good.

Late payment of invoices by large businesses to small business is a bad problem getting worse in Australia. According to a UK report from earlier this year, Australia was ranked worst of 19 countries when it came to late payment of business invoices — driven, highly regarded Council of Small Business Australia CEO Peter Strong has said, by “the biggest businesses in Australia deciding to use small businesses as [a] bank that doesn’t charge interest.”

But earlier this year, BCA member Woolworths said it was unilaterally increasing its payment terms for its suppliers to 60 days. And in August, journalist Michael West revealed that both Coles and Woolworths are adopting “pay on scan” terms, in which the invoice period only commences when a supplied item was scanned for sale, pushing invoice periods up to nearly four months.

The BCA would find it very easy to do something about this problem, if it were seriously interested in helping small business. Westacott wouldn’t even need to issue a media release. As a director of Wesfarmers, she could just raise it at the next board meeting she attends — because Wesfarmers owns Coles. In fact she doesn’t even need to wait for the next trip to Perth. She could just pick up the phone to Wesfarmers chairman Michael Chaney — who is a former head of the BCA — and ask him to sort it out.

As for the tax bill currently before Parliament, Peter Strong, in COSBOA’s submission on the bill, raises another issue:

“The Australian community, including the small business community, has become suspicious of a number of big businesses who seem to be dodging their tax and abusing the tax system. The facts as we see them are that 90% of businesses, of all sizes, pay their due tax and are fine ethical and responsible members of the Australian community. The few that don’t give the rest a bad name. Those few also make a negative impact on the federal budget and the economy and need to be bought to task…”

It’s an excellent point. Perhaps Westacott’s speechwriters should read Strong’s submission before next cut-and-paste one of their screeds on multinational tax cuts.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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