Dr Sergio Arzeni keynote address G20SME conference
In a passionate address, to the delegates at the the G20 Agenda for Growth: Opportunities for SMEs conference on 20 June, 2014, Dr Sergio Arzeni argued that the proportionate compliance costs suffered by SMEs can be 10 to 30 times greater than incurred by a larger company.
The OECD estimates that reducing these costs by a quarter would generate an extra 1 per cent of economic growth — half the Sydney G20 target. He called for smarter, better regulation, rather than its elimination altogether.
SMEs and large businesses should play by the same rules to build a just economic system. Extravagant levels of profit shifting by large companies into tax shelters have been well documented and mean SMEs can pay six times more tax than large companies. In some countries, SMEs pay 30 per cent corporate tax while many hugely profitable and widely admired corporations pay just 5 per cent or even 2 per cent.
Investment and growth will rebuild trust between citizens and government and renew faith in the economy. The recovery from the GFC has created relatively few jobs, and the OECD advocates ‘inclusive growth’ to remedy this situation. A recent OECD report on ‘missing entrepreneurs’[i]focuses specifically on the potential of entrepreneurship to address the worldwide blight of youth unemployment. Too many young people are not in education, training or employment in Europe and the United States. Even in China there are millions of unemployed graduates, while Australian degree holders can struggle to find suitable jobs.
The OECD produced an evidence-based tool to monitor access to finance for SMEs after the GFC. The 2014 Scoreboard for Financing SMEs[ii]will be released shortly, covering 31 countries, although a lack of domestic data means it will not encompass Australia. The G20 Small and Medium Enterprises Workshop held in March 2014 in Riyadh, Saudi Arabia[iii], emphasised the need to identify and adopt international best practice. The OECD is developing an SME policy benchmark to help nations adopt appropriate policies.
Modern economies are so interconnected that the solutions to pressing regional and national problems can depend upon international accords. The influence of politicians, the financial sector and big business upon such negotiations is undoubted, but the input of SMEs has been largely ignored. Dr Arzeni therefore praised the appointment and commitment of Minister Billson and underlined that SMEs require a voice at every level of government deliberation.
Germany’s recent trade surplus of 200 billion euros was generated in large part by its 10,000 ‘Mittelstand’ companies. Italy’s medium-sized companies rank highly among 1,000 product categories, despite the nation’s smaller size. Policy should therefore encourage the domestic and export development of such firms as they offer the greatest scope for increased output and employment.
Australia’s creation of a cabinet position for SMEs should offer an example for other OECD members, and Australia’s range of progressive SME policies could offer an example of best practice around the world.
Dr Sergio Arzeni, is the Director, OECD Centre for Entrepreneurship, SMEs and Local Development. He is the Head of Programme for Local Economic and Employment Development (LEED). Above is the summary of his speech as seen in the report of the G20SME conference.
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[i] The Missing Entrepreneurs: Policies for Inclusive Entrepreneurship in Europe – Report; OECD, The European Commission, 18 December 2013; http://www.oecd.org/cfe/leed/missing-entrepreneurs.htm
[ii] OECD Scoreboard for Financing SMEs 2014; http://www.oecd.org/cfe/smes/financing-smes-scoreboard-2014.htm
[iii] The G20 Small and Medium Enterprises Workshop, Riyadh, Saudi Arabia; March 2014; https://www.g20.org/news/g20_small_and_medium_enterprises_workshop_riyadh
