Chapter 9. Australia

Figure 9.1. Structure and performance of the SME sector in Australia
Figure 9.1. Structure and performance of the SME sector in Australia

Notes: Chart B. data refer to corporations only.

Sources: Charts A, C, D, E: OECD Structural and Demographic Business Statistics database, http://dx.doi.org/10.1787/sdbs-data-en; Chart B: OECD Timely Indicators of Entrepreneurship database¸ http://dx.doi.org/10.1787/sdbs-data-en.

 StatLink http://dx.doi.org/10.1787/888933924970

SME business conditions and access to strategic resources

Institutional and regulatory framework

In Australia the cost for starting a business is among the most accommodative in the OECD. Past reforms cut red tape and business entry costs significantly. But the insolvency regime remains more stringent than the OECD median. The government is pursuing effort to reduce the regulatory burden on smaller firms. Since 2016, the Australian Small Business and Family Enterprise Ombudsman serves as an advocate for SMEs and plays a central role in designing SME-friendly federal laws. One of its first major outcomes is the conclusion of a Supplier Payment Code, engaging large businesses on a voluntary basis and bringing payment delays to less than 30 days. Australia also undertook a reform of insolvency laws in 2017, with a reduced default bankruptcy period (to one year instead of three) and a ‘safe harbour’ from personal liability for business owners.

Market conditions

Australia’s big distances, its remoteness from global markets and the concentration of business activities in a small number of urban areas hamper competition and slow the diffusion of innovation. Significant reforms to the Competition Law were undertaken in 2017 with a view to limiting the misuse of market power and providing greater protection to small businesses and broader choice to consumers. An internal working group to the Australian Competition and Consumer Commission has been established to track disruption in markets and assess the impact of new business models and products. SME Export Hubs (2018-19) are also set up as local structures to enhance SME export capacities.

Infrastructure

Australia faces high costs of inland transport and difficult access to the outback. The National Policy Framework for Land Transport Technology (2016-19) promotes the uptake of emerging transport technology. The 2018 Infrastructure Priority List identified over AUD 55 billion of critical infrastructure investments with a focus on integrated public transport solutions and enhanced rail network capacity in the large cities.

Access to finance

Conditions for Australian SMEs to access bank finance are on par with the OECD median. The interest rate spread has however increased in recent years, reflecting a reassessment of SME lending risk, and businesses in the start-up or expansion phase face more difficulties. A Comprehensive Credit Reporting (CCR) system was introduced to improve mandatory SME credit information and the Open Banking initiative) aims to improve transparency in risk assessment by allowing entrepreneurs sharing their data with non-bank lenders. Australia also reformed its tax system in 2016 in order to incentivise investments in high-potential start-ups. Alternative financing solutions continue to grow and the government intends to promote innovative finance. Since 2016 a regulatory sandbox allows FinTech companies to test innovative solutions and a crowd-sourcing equity framework has been set up.

Access to skills

Australia ranks high among OECD countries in terms of adult literacy and student proficiency in core competences. Skills shortages are low relative to other OECD countries. However there are pockets of skills that are under-used, mainly due to over qualification and a low labour force participation of some populations (e.g. women, youth, indigenous persons etc.). The National Innovation and Science Agenda (2015) is a comprehensive plan for creating long-term cultural change and a globally focused innovation mindset for Australians. It contains proposals to increase student interest in ICT, STEM skills and women participation in S&T careers. The Youth Jobs PaTH programme (2018) also aims to raise employability of young and indigenous people.

Access to innovation assets

Australian SME uptake of new digital-enhanced practices, especially cloud computing services and e-commerce, is among the highest in the OECD area but there is room for improving SME participation in R&D. The Next Generation Technologies Fund (2016-26) earmarks AUD 730 million for accelerating R&D on defence strategic priorities. As part of it, the Small Business Innovation Research for Defence programme supports research undertaken by SMEs and the Defence Cooperative Research Centres strengthen industry-science linkages, particularly with SMEs, to increase research and innovation capability.

The full country profile is available at https://doi.org/10.1787/34907e9c-en

References

Australian Government (2018), Infrastructure Australia : Annual Report to Parliament 2017-18, https://infrastructureaustralia.gov.au/about/files/IA_Annual_Report_2017-18.pdf (accessed on 03 December 2018).

Infrastructure Australia (2018), Report to Parliament 2017-18, https://www.infrastructureaustralia.gov.au/about/files/IA_Annual_Report_2017-18.pdf.

OECD (2018), Getting Skills Right: Australia, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264303539-en.

OECD (2017), OECD Economic Survey: Australia, OECD Publishing, https://doi.org/10.1787/19990146.

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