Page 967 - Week 03 - Wednesday, 21 March 2012
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The estimated wealth of family businesses in Australia was $4.3 trillion in 2006. So we are not talking about small businesses and we are not talking about microbusinesses. We are talking about a segment of business from the very large through to the very small in this country. And that is what perhaps makes this segment an interesting segment to deal with. This analysis relates to the situation six years ago, so the valuation may be somewhat higher now than $4.3 trillion, the effects of the global economic and financial crisis notwithstanding.
A key issue with this quantum of wealth is that more than 80 per cent of owners of these businesses plan to retire within 10 years, leading to the transfer of $3.5 trillion in wealth. Clearly a transfer of wealth of this magnitude has the potential to raise significant issues in terms of prospective change in ownership, along with capital gains tax and other taxation consequences.
Family businesses do want the government to get out of their way, whether it be federal, state and territory or local governments. Equally, family businesses, like small businesses generally, do not want handouts. What they do want is a sensible and supportive policy framework, both federal and state, within which they can get on with their business, so that they can get on with being the dynamic force that they have been for many years, funding innovative activities, supporting a substantial workforce, generating profits and being positive influences in their communities.
When business says that government should get out of the way, one of the major concerns of business is the burden of compliance. In many regards, the issue of compliance relates mainly to the activities of the federal government, particularly concerning the administration of the Corporations Law, the taxation system and the industrial relations environment. Nevertheless there are issues which are in the province of the ACT government. Many of these relate to administrative, revenue raising and similar provisions.
As the Canberra Liberals have noted on many occasions, at least some of the ACT’s revenue raising provisions can be questioned, given the policy objective of some of these revenue measures and also the relatively small quantum of revenue raised. Whichever level of government is responsible for particular compliance matters, they should review all of these regularly and remove any that are no longer necessary.
The complaint from family-owned businesses and other smaller businesses in particular about the burdens of compliance is that there are additional costs imposed on businesses through these compliance matters, and these matters often do nothing to enhance productivity and almost inevitably impair productivity and reduce profitability. Indeed, a key issue for smaller business is not so much about complying with the plethora of compliance matters; it is about ensuring that businesses do not break any of the laws to which they are subject. Many need to engage specialist external advisers at considerable cost or employ specialist people also at considerable cost to make sure that all relevant laws are complied with correctly.
Another area of concern to family businesses relates to industrial relations. Family-owned businesses have an excellent record of looking after their staff. They do not
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