Saying that 2020 has been a trying year is a significant understatement. But now we need to think about how Australia’s economy can recover and grow post-COVID.
Fostering a strong business environment is the key to Australia’s post-pandemic recovery. And much of the country’s economic recovery will be driven by mid-market businesses finding creative ways to keep serving current customers and capitalising on opportunities to find new ones.
Australia’s middle-market businesses produce about 25% of national revenue (A$645 billion) and contribute one-fifth of the country’s net tax revenue.
As the engine room of Australia’s economy, the mid-market – made up of inspired and energetic business owners and leaders – is a group who’s up to the challenge.
What are the challenges and opportunities for mid-market businesses?
The Pitcher Partners Business Radar: Understanding the businesses that drive Australia’s economy report canvassed more than 400 private and family business owners and operators to find what challenges and opportunities are on their radar post-COVID.
Paradoxically, issues that some flagged as a challenge others saw as an opportunity. That demonstrates the strong mindset of many business owners and leaders across Australia.
So what’s top of mind for Australia’s private and family-owned businesses?
- Gaining access to new markets is seen as a top opportunity by just over half of the respondents across seed, growth or mature age businesses.
- Taking advantage of digital marketing is identified as a top opportunity by 46% of respondents in seed-stage businesses and a top challenge by 38%.
- Finding new sources of growth in their market is flagged as an opportunity by 51% of respondents in growth-stage businesses and a challenge by 35% in the same sector.
- For mature-stage businesses, finding internal efficiencies to cut costs is identified as a top opportunity by 53% of respondents and a top challenge by 35%.
Will supply-side reform drive post-COVID economic recovery?
Many mid-market business owners will say that it’s up to you to create and capitalise on opportunity. However, a strong business environment can be the extra boost these individuals need to keep growing their businesses.
Treasurer Josh Frydenberg, in his address at the National Press Club on 24 July, stated that supply-side reform would be a key part of Australia’s economic recovery. He also cited conservative leaders Margaret Thatcher and Ronald Reagan as an inspiration.
How much of the government’s 6 October Budget will seek to stimulate economic growth by Reaganesque deregulation and lower taxes is yet to be seen. But it was a welcome message to those who fear Australia is heading for a point of no return when it comes to relying on deficits and fiscal support to keep the economy afloat.
Naturally, Frydenberg’s ideas were less popular in other quarters. The important thing to remember is that disagreeing is OK. It’s an opportunity to hear both sides of an issue and find a productive middle ground. That’s something we’ve lost sight of in recent years.
This is an opportunity to empower people to capitalise on new business opportunities, build wealth and engage with domestic and international markets in new ways. Let’s not waste it.
Broader business and tax policy reforms also needed
Based on what’s been mentioned to date, industrial relations reform, tax incentives and deregulation could be key components of the government’s Budget agenda.
These reforms will all play a role in supporting the country’s economic recovery, but we need to look at all the policies that could help.
For business, reviewing the complexity of some taxes would be a good start.
Simplifying tax is an important issue for businesses of all sizes, but particularly the mid-market whose business owners often put their own capital on the line every day.
“Simplifying tax is an important issue for businesses of all sizes, but particularly the mid-market whose business owners often put their own capital on the line every day.”
As Ken Henry, former Treasury Secretary has suggested, a simplified cash-flow tax that replaces the GST, payroll taxes and state and territory taxes might be one solution.
We need to have the debate on these reforms, and mid-market businesses need a voice in this debate.
The balancing act between economics and politics in Australia is one that’s becoming more tedious and difficult to navigate. Too often, business productivity and economic growth become collateral damage in an ideological stoush.
“The balancing act between economics and politics in Australia is one that’s becoming more tedious and difficult to navigate.”
Governments should not develop policy without properly consulting industry.
If supply-side reform is the name of the game in Australia’s economic recovery, private and family-owned businesses, which will drive much of the growth afforded by those reforms, need a seat at the table.
Find out more:
Business Radar report
Find out more about the issues and challenges facing Australia’s middle-market businesses with the Pitcher Partners Business Radar report.Access the Business Radar report