Abbott and Hockey’s small business stimulus is a smart move

Joe Hockey, his grin and Finance Minister Mathias Cormann leave a press conference during the budget lock-up on Tuesday.

Eight weeks ago, Tony Abbott said the next budget would be a “much less exhilarating budget for those who are budget devotees and structural reform enthusiasts”.

At the time, I wondered who the Prime Minister was talking about. I had never met a “budget devotee” or a “structural reform enthusiast” and, frankly, hoped I never would. They sounded like bores.

However, after the budget speech this week, it became apparent there are lot of these people around. Surprisingly, some are media people many would consider on the Left of the political spectrum.

When Liberal politicians are bawled out by journalists on the ABC for taxing and spending too much, you know the entire country has been turned on its head.

Perhaps you are not seeing the funny side of it and the budget alarms you. The one thing we can agree on is this: Joe Hockey, this week, caught us all off guard. On budget night, we sat on the couch stunned.

The Treasurer looked like the cat that ate the cream and Bill Shorten looked like someone ate his lunch, which they basically did.

Hockey stole a Labor budget, scribbled over it, and waved it back in their faces with a great big grin.

By the looks of it, adult government was an unpopular straitjacket that chafed, and it has been junked for something more youthful and relaxed.

Apparently this is what the voters want so, by popular demand, grunge government is in, deficits are cool and debt is the new black.

In all seriousness, Australia is drifting towards recession. Maybe that doesn’t matter, maybe it is high time we sorted the hay from the chaff, but regardless, the budget looks like an attempt to prevent a downturn. Instead of sending out cheques and building school halls, hopes are pinned on delivering stimulus to the small business sector, which is actually the biggest business sector in the nation.

It is great to hear the Prime Minister and his team talking about the importance of small business. It is refreshing to hear politicians urging people to get out there and “have a go”, but talking up the creation of jobs is a bit old hat. These days, most people want to hear about social mobility, the opportunity to earn money in a way that suits them. Working for someone else is not seen as a great prize. The No 1 aspiration of many is to be their own boss and to do it from home.

If debt is the new black, then self-employment is the new job. The government that recognises this is the government that will win the next election.

A little more than 60 per cent of the workforce works in the small business sector. Many people in the sector prefer not to hire in the traditional sense and many people don’t want to work in traditional employment.

As of November 2013, there were 986,000 self-employed ­people who did not employ anyone else and 1,013,000 self-­employed who employed, or allocated work to, 5.2 million ­people. Businesses with more than 50 employees employed 2.6 million people, the public sector only 1.8 million.

Going by the numbers alone, if the government wants to give money and confidence to the productive mainstream, then this budget will hit bullseye.

Ken Phillips from Independent Contractors Australia says that during the past five years a strong pro-small business agenda, including in the tax area, was implemented by the Cameron government in England: “In the last four years, the UK has had the greatest growth in self-employment in its history, adding 570,000 positions. It’s been this 14.2 per cent increase in self-employment that’s dominated the UK jobs growth, whereas Europe has been stagnant.”

Phillips further points out that while the Conservatives ran a pro-small business agenda, the British Labour Party returned to its union roots and promoted the ideals of traditional employment.

In Australia, the Labor Party is, by virtue of its union owners, programmed to fight the self-employment model. Australian unions harvest their power through “relationships” with big business and some big businesses use unions to squash competition and get on side with Labor governments.

In my experience, big business supports Labor more often than not and it wouldn’t shock me if many of the business groups lined up to support the ALP before the next election.

The Abbott government would be well-advised to leave these fair-weather friends to their devices. The small-business segment is where political success lies.