Tax breaks not the recipe for economic growth

| October 19, 2010
Prof Beth Walker

Prof Beth WalkerMEDIUM-size enterprises are the poor cousins of big business with little policy influence, despite their powerful productive capacity.

Professor Beth Walker from Edith Cowan University (ECU) School of Management argues both sides of politics have failed on business policy. Perhaps it’s time for a medium-enterprise caucus.

“Neither side had any policy this election. They always talk about reducing the tax rate, but it’s such a tiny amount for most businesses. It doesn’t add up to much. They talk about putting in some small incentive. None of them came up with any new initiatives about how to get more productivity.” She said.

Professor Walker heads up ECU’s Small & Medium Enterprise Research Centre (SMERC)

The self-funded unit conducts research and runs training programs for government and private enterprise.

She identifies Enterprise Connect as one of the few initiatives to address increasing productivity in the business sector, but believes this focus has been largely missing from policy debates.  

“To continue to bang on about reducing the tax rate is so simplistic. It’s a bit like, how do you stop deaths on the road? Well, you can take all the cars off the road for one.”

“I would suggest there needs to be more fundamental changes, rather than tinkering around the edges on tax. It’s really about how to we get people working harder and putting some serious money into innovation.” Professor Walker said.

She argues a longer-range view must be taken in designing legislative frameworks for business.

“In terms of policy, it’s all term-of government stuff. This is what all the programs are. It’s a vote getting exercise, rather than asking where do we want to be as a country in 10 or 20 years time?”

“It’s got to be more than one term.”

Professor Walker believes medium-sized enterprises are overlooked by government in spite of their productive potential.

“There is certainly a gap in the market. The Australian landscape is completely and utterly dominated by big business, and that goes to our political agendas too.”

“But it’s the medium-size businesses that really are going to generate more innovation and more activity. They are ignored as a group because they don’t caucus as a group.”

“Medium businesses probably feel like the poor cousins of big business. The number of medium businesses is small, but they are clearly the growth ones.”  Professor Walker said.

She is critical of innovation support in Australia and believes more needs to be done to block the talent drain.

“Most of our serious innovation goes offshore. I did a study on people who had received innovation grants and what they did with them. They said Perth was a great place to start things, because there’s a limited market so you can really use it as a test-bed.”

“But after that, more than likely they went straight offshore. It’s not just our population – there’s not enough incentive to do any kind of innovation. There’s no innovation clusters, no hub where if you’ve got a great idea, you can get some kind of government support.” Professor Walker said.

For more: Small & Medium Enterprise Research Centre (SMERC)

 

 

Beth Walker was interviewed for First 5000 by Virginia Harrison

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