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Prime Minister hopes small business will set the pace for new employment opportunities in Australia

JOHN HIGHFIELD: As the Government introduces its workplace reform Bill into Federal Parliament, the Prime Minister John Howard has reiterated his hope that it will be small business that will set the pace in creating new employment opportunities in Australia. But will small business be able to meet the Prime Minister's expectations? Although the sector has the potential and the flexibility, there are real fears that large numbers of newly-redundant public sector employees may upset the equilibrium in the heady and uncertain world of small business operations. Peter Jepperson prepared this report in Melbourne for P.M.

JOHN HOWARD: You can't assume that, for example, the redundancies in the public service, all of which to my advice have been voluntary, so far - you can't assume that all of those people are going straight onto the jobless queue. Many of them are going into jobs elsewhere in the economy. The level of unemployment which we inherited, which was around 8.5 per cent is still 8.5 per cent and I repeat: Getting that down over the longer term depends really on two things above everything else, it depends upon freeing the labour market and it depends upon running a fast rate of economic growth.

I think another big contribution, of course, will be within those two methods, within those two paths will be of course to get the small business sector moving again, but that really is part and parcel of reforming those two overriding areas.

PETER JEPPERSON: Mr Howard this morning put his faith in the power of small business, and there's no doubt that small business is a great employer. Some estimates suggest there are some 860,000 small businesses in Australia, but small business is as precarious as it is rewarding.

Dr Harry Burley is a statistician who teaches small business at La Trobe University in Victoria.

HARRY BURLEY: Well, actually, in Australia small business employ far more people than the whole public sector put together - State and Commonwealth and municipal councils.

PETER JEPPERSON: How many?

HARRY BURLEY: They employ about 1.7 million employees, quite apart from the employers who are self-employed, there's another 300,000. So that's two million employed in small business.

PETER JEPPERSON: What is small business? How do you define it?

HARRY BURLEY: Small business in non-manufacturing is less than 20 employees, any industrial organisation, but in manufacturing it's less than 200 employees.

PETER JEPPERSON: What sort of small businesses are we talking about here? Are we talking about the traditional trade areas of small business, or what are we talking about nowadays, in the '90s?

HARRY BURLEY: Service producing industries, wholesale trade, retailer trade, accommodation, cafes, restaurants, transport, communication, finance, education, health and community services. Cultural and recreational services are increasing at a very fast rate, including personal and other services.

PETER JEPPERSON: Can we put our faith in small business actually picking up the pool of unemployment at the moment?

HARRY BURLEY: I think we will have to, because small business is subject to the real pressures of the market and provides services. Government is unable to do it and large industry, in terms of international tradeable goods has to compete on the international market.

PETER JEPPERSON: The labour market at the moment is tight, so small business operators are looking for more than just labour market reform. They want new markets to provide growth. Without these markets many small business people fear they'll go to the wall when retrenched public sector workers tumble into the small business market. Peter Seekman(?) is the Federal President of the Australian Small Business Association.

PETER SEEKMAN: Well, essentially there's been a lot of talk about small business absorbing the people who are likely to be put off from the public service or from downsizing of big business. Small business will absorb them, but it's what I call supply size employment. Essentially, when people don't have a job, they go out looking for one and they can't find one, ultimately the only answer is to go and buy into or somehow or other get involved in a small business. This causes undue pressure on probably viable small businesses which are around, ultimately, possibly, sending some of them to the wall.

PETER JEPPERSON: So are you saying that the Prime Minister's hopes about small business actually benefiting from changes to the labour market and more people coming into the labour market with small business might not be true?

PETER SEEKMAN: It can be true on the basis that if we can become more cost competitive it opens up greater markets to us. But just on the idea that small business will employ more people, that doesn't give us more markets or make us more viable.

PETER JEPPERSON: In the end it may well be government action and not the free market that will stimulate small business employment. Shadow Treasurer, Gareth Evans.

GARETH EVANS: I'm finding examples all over the country where there is huge opportunity which needs only a little smidgen of assistance from government to make things happen, but this Government has taken that assistance away. Take, for example, Cairns Airport. The Commonwealth Government, under our Regional Development Program, was going to put $2 million in there to establish a refrigeration and freight forwarding and marketing facility in there to fill the bellies of those 50 planes a week that are going to Asian locations from Cairns with nothing more than tourist suitcases, to fill them with produce from small producers around the whole north Queensland area, from Mackay up to Cape York and the fishermen at sea and people in the Atherton Tableland. For $2 million we could have generated, according to the feasibility studies, $240 million worth of exports within five or six years. Part of the budget has been to slash that $2 million start-up funding. Small producers are lamenting as a result.

PETER JEPPERSON: So specifically, what does the Federal Government have to do?

GARETH EVANS: What the Federal Government has to do is to put money back into advice and assistance through Austrade and AusIndustry, uncap and re-establish those export market assistance programs and put together a sensible regional development strategy, whether it's for Cairns or Whyalla or Tasmania or anywhere else which does involve careful judgments in appropriate cases of top-up funding which can really make a huge difference to those crucial regional markets.

JOHN HIGHFIELD: The Shadow Treasurer, Gareth Evans, with P.M.'s Peter Jepperson in Melbourne.