“The Prime Minister’s announcement today confirming the detail of the Australian Business Growth Fund, is further welcome recognition of the role small business plays in providing jobs, training, and opportunities for Australians,” said James Pearson, CEO of the Australian Chamber of Commerce and Industry, Australia’s largest and most representative business network.
“98% of all Australian businesses are small businesses. These small businesses employ 5 million Australians. And they provide jobs to a third of young Australians in the workforce and 40% of Australia’s apprentices. Small Business is a Big Deal.
“This announcement is recognition that small businesses is one of the major drivers of economic growth.
“One of the biggest barriers for small business is the difficulty in accessing affordable finance.
“Most small business lending is secured against personal assets, such as the family home. For those small business owners who do not own a home, or for others that need additional finance for their businesses to grow, accessing finance can be difficult.
“The Australian Business Growth Fund involves the government partnering with banks and super funds to create a national funds pool which will take an equity investment in small business.
“The Fund provides small business with the equity needed for expansion, while ensuring small business owners will not have to risk all of their assets.
“Access to patient capital is an issue for many small businesses. Few banks and other lending institutions are willing to take on long-term capital lending, requiring early returns to finance debt,” Mr Pearson said.
“The Australian Business Growth Fund is likely to provide the patient capital necessary to allow businesses to realise their investment over a longer period of time.
“The Fund will mirror a similar initiative implemented in the UK which has seen investment of over $2.7 billion in a range of sectors across the economy.
“The Fund will start small, seeded with $100 million to support investment in 30-50 business, but in the longer term will expand into a $1 billion program. Its success will depend on support from investors and the performance of the investment targets. Many small businesses have the potential for high growth based on productivity improvements, job creation, and application of technology – offering long-term returns to investors.
“The Government has set a target of creating an average of over 50,000 new small businesses a year over the next five years. Setting a quantitative target will act as a guide and enable the measurement of progress in growing small business.
“The Australian Business Growth Fund complements other initiatives that will encourage investment by small business such as the Australian Business Securitisation Fund; the lowering of the company tax rate for small business to 25% and increase in the amount and eligibility for the Instant Asset Write-off, all of which received bipartisan political support.
Mr Pearson said, “In order to complete the picture, small businesses want to see the next federal government take action on three fronts:
- Improve Australia’s workplace relations system to make it easier for small businesspeople to hire people and run their businesses well;
- Get the price of power down and keep it down; and
Stop the collapse in skills so that Australians are trained properly for the jobs of today and tomorrow.”