Small Business Resilience in Western Australia

NATIONAL SOUTH AUSTRALIA WESTERN AUSTRALIA

Dr Michael Schaper was the former ACCC Deputy Chair for ten years and presided over the ACCC Small Business and Franchise advisory Council of which MGA is a long serving active member. Michael has a deep passion for the Small and Family Business community, particularly in his home state of Western Australia.

Bushfires. COVID-19. Cyclones. Freak hailstorms. Flooding. These are just some of the events that have happened to Australian communities in the last few years. What will we face next?

We cannot predict the future, nor the consequences of these sort of unexpected events. We can prepare ourselves in advance for them and mitigate the damage that they are likely to cause.

We have seen a rushed set of COVID-19 lockdown support payments introduced by State and Federal governments, but it is a reaction to today’s problem. It is not a long-term strategy to keep our small businesses afloat when the next (non-COVID) disaster hits.

Australia already has a reasonably effective system of support for individuals when disaster strikes. Income support, housing, clothing, personal assistance, one-off grants from government and charitable endeavours for individuals all roll out quickly whenever one of our communities is hit.

There is even a Disaster Assist website run by the Federal Government to help victims locate support. It is not perfect, but it helps people to get back on their feet, to get financial support, and to deal with misfortune as quickly as possible.

However, almost all of this is for individual Australians, in their personal capacity. We have nothing ready to quickly roll out and support the backbone of our national economy: our micro, small and medium-sized businesses.

In the country that is home to the black swan, we have done precious little preparation for so-called black swan events. With more than 2.1 million such businesses across the country, employing almost half of the workforce, it is an oversight that needs to be corrected. An unexpected misfortune can quickly kill a small business. Small firms typically trade on very low turnover levels and make thin profit margins. Most have little, if any, cash reserves. And many have only basic levels of insurance. So, it doesn’t take much to destroy them — a week or two of forced closure can be enough to start the inevitable decline.

And when those businesses shut their doors, it can trigger a roll-on wave of misfortune that quickly spreads throughout the broader community. Employees stand to lose their jobs. Business loans cannot be repaid. Rents are unmet. Suppliers and creditors (most of whom are other small businesses) don’t get their cash.

So, supporting small businesses and helping them to stay afloat in a disaster isn’t about enriching their owners — it’s about maintaining the necessary economic infrastructure of the community.

Speak to the handful of experts who have specialised in this area, and they can tell you that there are already some well-established features about what does — and does not — make for effective emergency business support. For example, cash grants are often more useful than in-kind assistance. The money can quickly recirculate into local economies as businesses once more start to pay bills and their employees. In contrast, support loans are often problematic for smaller traders, because they represent further debt that can quickly become insurmountable.

Yet we continue to wait until an emergency is upon us before belatedly making some response. And each time the mix of support is different, for each disaster, and in each State. Right now, different firms, with different legal structures, in different industries, are being supported differently. And few of them would know exactly what they are entitled to. Would not it be preferable to develop a set of basic national business back-ups with consistent principles that we can swing into action promptly whenever disaster strikes?

Now is the time to get ready for this. Pre-plan it, work it out, practise how it would be delivered. Fine-tune it and make sure it is effective. Not just in case we have more COVID-19-related lockdowns, but because this sunburnt country of droughts and flooding rains will always challenge us.

It wasn’t raining when Noah built the ark. Better to be prepared in advance than bemoan the problem afterwards.

Dr Michael Schaper is an Adjunct Professor with the John Curtin Institute of Public Policy at Curtin University