Budget an opportunity to fire up SME sector

Sydney, Australia, 11 May 2015: Tomorrow’s budget is an important opportunity for the federal government to get behind the SME sector and create an environment in which businesses will have the confidence to invest for growth.

Research conducted by Bibby Financial Services among small and medium-size businesses (up to 200 employees), shows that despite weak economic conditions and concerns that government policies are not working, SMEs are ready to invest. According to the survey, conducted before last week’s cut to interest rates, 72% of medium-size businesses intend to invest in their businesses in next 12 months. With last week’s RBA cash rate decision, it is likely that even more SMEs are planning to invest.

Mark Cleaver, Managing Director, Bibby Financial Services Australia and New Zealand, said: “The good news is that interest rate cuts are having a positive effect. We have seen an increase in the level of borrowing after several years of below trend growth in business lending. Among businesses that intend to borrow over the next 12 months, 32% said they will borrow to fund growth and more than one in five (22%) will borrow to fund innovation projects. Both indicators have increased from July 2014, which is an encouraging sign, showing businesses are prepared to invest in the future and become more proactive in driving growth.

“With interest rates at historic lows and with SMEs prepared to put their money to work, government has an opportunity to send businesses a clear signal that now is the time to invest. Our research shows that SMEs are looking to the government for support and are calling for a 1.5% cut to their tax rate, increased funding for training and more flexible labour relations,” Mr Cleaver said.

“The Federal Government should recognise that SMEs, which are responsible for almost 70% of employment in Australia, feel that the government policies introduced in the past 12 months have not worked. Fewer than half the businesses surveyed thought the government’s policy initiatives had helped them to grow (43%) or provided them with confidence in their future (49%). Less than half the businesses surveyed said they had reduced their operating costs (43%), hired more staff (45%) or improved their access to finance (48%) as a result of government policy initiatives. Tomorrow’s Budget is an opportunity to put that right,” Mr Cleaver said.

“The majority of the 620 businesses surveyed in the research are medium-size businesses, employing up to 200 people. These are significant businesses that have the collective ability to boost national economic growth, employment and productivity,” Mr Cleaver concluded.

The Bibby Barometer surveyed businesses employing between 1 and 199 people. Almost half the businesses (46%) employ 20 to 199 people, while 38% employ five to 19 people and 17% employ one to four people. Slightly more than half the businesses surveyed are family-owned.