Small Businesses, Innovation, and the 2008 Budget by Martie-Louise Verreynne

15 May 2008
Wayne Swan's maiden budget clearly recognises the importance of small and medium enterprises (SMEs). It also signals a move away from providing direct assistance to a system where the government strives to improve the environment for SMEs. While recognising the sector's need for support, it also attempts to economise. New specialist centres have been created to provide advice to small firms, but several grant programs have been ditched. The Commercial Ready program, Industry Productivity Centres and the national nanotechnology strategy will be axed. The Commercial Ready program provided grants to firms commercialising advanced technologies, and will be greatly missed, but the government argues the program was supporting many projects that would have gone ahead without this funding. Small Business Minister Craig Emerson hails the one-stop advisory shops as one of the major benefits that small firms will receive from the 2008 Budget. A total of 36 Centres will replace the current field officers, providing a range of advisory services at a cost of $42 million. These services will range from setting up a business to bookkeeping, marketing and growth strategies. A number of announcements promise to improve innovation in SMEs. Ten Enterprise Connect Innovation Centres will be established at a cost of $251 million over five years. These Centres will aim to boost productivity and innovation in SMEs, with half focusing on innovation and the other half on manufacturing. Another $100 million a year for a period of five years have been set aside for projects yet to be announced, many envisioned to originate from the Cutler Review of the National Innovation System. This review is eagerly awaited by the sector. Also important is the $4.7 billion that will be spent on building a state of the art broadband network, which will contribute towards improved efficiencies and networking in many small firms. Other initiatives may also benefit small firms. An extra 31 000 skilled migrant places have been allocated in the budget, aiming to help ease the chronic skills shortage, employment and retention problems that many small firms are experiencing. Much emphasis is placed on training and skills development, hoping to further relieve the skills shortages, especially through apprenticeships and retraining for the current unemployed. Small firms are also encouraged to introduce family friendly initiatives; grants of between $5000 and $15 000 are promised to start mentoring and other activities. Spending on infrastructure, in the form of a $20 billion Building Australia Fund, should also have a flow on effect for small suppliers and contractors in construction related industries. In general this budget holds many positive features for small firms. It has chosen not to intervene directly to try and encourage strategies in areas like internationalization. A generous view on this is the government believes that small firms will do the smart thing anyway, thereby acknowledging that it now views the sector as mature. Martie-Louise Verreynne is a Lecturer at the UQ Business School, specializing in small firm strategy and entrepreneurship. She can be contacted by email at