Dominoes. How to destroy a nation, Australian edition.

According to Yahoo finance, in the USA, small business contributes:

44% of the country’s GDP and employ(s) half the nation’s private-sector workforce

It is not unreasonable to assume that, before CovCrisis2020, it would have been a similar number in Australia.  Many, if not most of these small businesses are backed up by the savings (ie homes) of the small business owners.  They are not, in the Bill Shorten vernacular, fat cats or from the big end of town.

They are the couriers, food hall franchisees, news agents, small manufacturers, bottle shop owners, bakers and the such.  They employ a few people here and there, even though they are financial penalised relative to their larger competitors for not having the scale to have an enterprise agreement.

They aren’t members of the Business Council of Australia.  They don’t get Order of Australia pins.  They don’t get seats on the National Covid Coordination Commission.  They can’t bid for government contracts because they don’t have the scale or resources to meet even bid requirements.  They aren’t able to hire the ex-pollie/staffer run lobby shops to advocate their case.  They aren’t able to pick up the phone and get a direct line to the Premier or Prime Minister or Department heads.  They don’t go to BLM protests because they don’t have the time between running their business, filling in BAS forms and seeing their families.

When the ATO or ASIC comes a knocking, even if they have done nothing wrong, they tend to capitulate because they don’t have the resources or time to fight.

When they are forceably shut down due to administrative error, malfeasance or reckless disregard, they have no recourse.  There is no compensation fund available.  And if there was compensation it would be the equivalent of moving coins from one pocket to another because the compensation fund would come from the taxes they pay.

These are the quiet Australians for whom no one seems to be speaking for.

If they are wiped out, so are their savings, their homes, their livelihoods.  They have no fall back or come back mechanism.  These aren’t public servants who have no skin in the game.  They can’t go to the bank and they can’t go to the capital markets to raise equity.  They are much like Australian schools, Gonski.

These are the businesses that also pay the taxes to pay for Australia’s 2 million plus and increasing public servants, the ABC and Australia’s welfare state.

Then there is also the impact on the banking system, its shareholders and bond holders if there is a wave of defaults.

And whilst our governments deflect responsibility for poor management and continue to fiddle with slogans, these engines of Australian enterprise suffocate.

Congratulations Australian government.

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30 Responses to Dominoes. How to destroy a nation, Australian edition.

  1. Nob

    Jeez TAFKAS. I didn’t know you cared.

  2. Nob

    But I don’t think it can be the same proportion as the USA, or even the UK, and certainly not Germany.

    Maybe Italy.

    It’s just too hard in Australia, the government climate at all levels is too hostile.

  3. Mark M

    Banks had better toughen up soon.

    Nice to defer repayments but what they are actually doing is deferring their own pain re evicting mortgagors in serous default with little equity.

    Sounds harsh – but if our great banks get the wobbles we’re all in hell.

    via john ruddick tweet: https://twitter.com/JohnRuddick2/status/1290538906077630466

    Banks’ deferred loans hit $274b as more borrowers pause payments
    https://www.smh.com.au/business/banking-and-finance/banks-deferred-loans-hit-274b-as-more-borrowers-pause-payments-20200804-p55ido.html

  4. mareeS

    CovoCrisis2020 has wrecked our daughter’s career in hotel management. She is re-skilling as a truck driver for light rigid, as everyone now shops online. Life throws these things at one.

  5. Karabar

    Waht can one say? Extremely well put!

  6. Nob

    They are the couriers, food hall franchisees, news agents, small manufacturers, bottle shop owners, bakers and the such.

    Apart from the small manufacturers, that list’s just the visible face of small business.

    The engineering services, the machine shops, the innovators , the inventors. Al comes from small business.

    If you think some big firm invented something, look again.
    They either did it when they were small or they took over some small outfit who did.

    All this blah about clever country, innovation.

    It comes from SMEs.
    Australia is destroying them.

    Who was it who posted here that “regulatory complexity is a subsidy from small business to big business”?
    That’s the best quote I’ve read all year. Everybody in my line of work gets it.

  7. RobK

    “regulatory complexity is a subsidy from small business to big business”?
    It certainly has been for quite a while in the farming business, and increasingly so.

  8. thefrollickingmole

    Who was it who posted here that “regulatory complexity is a subsidy from small business to big business”?

    Nothing like seeing the big boys begging for more ‘regulatory certainty” knowing the cost of 2 extra compliance managers spread over a 1000 employees is chicken feed compared to a competitor nipping at their margins.
    Or “the spice must flow” of subsidies as “certainty” for shit outcomes.

    https://www.allens.com.au/insights-news/insights/2017/06/finkel-review—renewables-the-importance-of-regulatory/

  9. nb

    Cruel beyond belief. Damage done by buffoons. ‘Government’ unveiled.
    With prosperity government loses importance, people become more independent. Prosperity releases people from those who desperately need to force others to their will. Prosperity is the great crime of the people. Unfettered economic activity as a philosophy is anti-control, and as an activity makes control unnecessary. War is the statist’s ideal. Prosperity is the statist’s foe.

  10. John Bayley

    “Small businesses accounted for 34 per cent of Industry Value Added (IVA) and 29 per cent of all wages and salaries paid in selected industries of the private sector in 2017-18.”

    “Employment growth in small businesses accounted for just under 60 per cent of total employment growth in the private sector between June 2013 and June 2018.”
    “Small businesses accounted for 57 per cent of jobs growth (as distinct from growth in employed persons) between 2012-13 and 2016-17.[2]”

    Those were the days.
    Source.

  11. duncanm

    Excellent.

    One correction:

    Congratulations Australian governments.

    All the bastards are guilty. Some more than others (I’m looking at you, Dan)

  12. Nob

    The Artist Formerly Known As Spartacus
    #3536083, posted on August 5, 2020 at 8:40 am
    That quote…. The was a Tafkas original

    You may take a bow.

    And keep repeating it to all your … economist friends or whatever circles it is you mix in. Used to mix in.

  13. MatrixTransform

    I like you TAFKAS.
    you have a way with words.

    I pointed out to my daughter just how much tax gets paid by our little enterprise

    She thought I was lying

    still wants to defund the Polis

  14. Astrid van den Akker-Luttmer

    Agree with you. Furthermore the isolation rule puts people in a desperate isolation. I say “desperate” since people become desperate, they have no one to lean on or get empathy from since they have to stay isolated with no human contact. Humans are “herd” people, if they do not have the “herd” support, many will die. Mental health support here will not do much good. No personal touch to touch/energy flow.

  15. Adelagado

    ” They are the couriers, food hall franchisees, news agents, small manufacturers, bottle shop owners, bakers and the such. “

    Canberra Bureaucrats and the ABC don’t even know such people exist. The Drum can never find any of these types to have on their panel.

  16. MACK

    All completely unnecessary. Remember leper colonies? Infectious diseases hospitals? Rule number 1 for incurable infectious diseases is that you take the afflicted away from everybody including their family. In this case with transmission early in the course of the disease, you also force family and close contacts to stay at home with police or army guards 24/7. The cases can go to a tent city at the Punkapunyal army base. Special arrangements for the sick and elderly, but everyone else of working age can get on with their lives, with advice to physically distance and wash their hands. Vastly cheaper than shutting down businesses, and almost certainly more effective.
    To say there is no alternative is purely ignorant.

  17. Ally

    No, no – the ABC does support small business – they support brothels and sex workers. That’s classed as small business isn’t it?
    I’m not trying to be funny — I’m serious.

  18. pbw

    About a month ago I was talking to the franchisee of a coffee shop, who was dreading a second lockdown (in Qld). If there was another lockdown she would lose her house.

    At the same time, she seemed to have no scepticism about the disease and the measures taken to “control” it.

  19. incoherent rambler

    Excellent post TAFKAS.
    Thank you.

  20. Lee

    Thanks Tafkas. I run an electrical business. My bread and butter has been electrical control systems for manufacturers. My customers have halted all their projects. We’re only doing breakdowns. Turnover has gone from 250k a quarter to 8k. Now I’m tendering on local government projects.

  21. Dave of Reedy Creek, Qld

    Overwhelmed by the news we have 2 million plus public “servants.” Most of the ones I have dealt with over the last 50 years or so are more like public menaces than “servants.” Have been blatantly lies to by local councils both in northern NSW and here on the Gold Coast numerous times. I reckon most are just bone lazy. Now reading the above article the arrogance of these so called knee jerk “servants” become even more evident.

  22. DD

    The droughts of Africa are real but the resulting famines are political.

    The COVID disease is real but the Australian pandemic response is political.

    Any politician who believes the pandemic response is not political belongs in a home for the bewildered.

    Those politicians knowing the pandemic response is political should be fighting against it. Few, if any, are fighting against it. So, these are our enemy. They deserve cruel and unusual punishment followed by death.

    We get caught up in the weeds deployed to ensnare us and forget we are in a war. This is not a game.

  23. Tezza

    Very well said.
    As a thought experiment, forget Covid for a moment
    and imagine a socialist revolutionary plot to destroy the Australian society and economy and permanently engorge the public sector and welfare dependency.
    How would such a plot look different from Australia’s Covid policies?

  24. Lee

    They have no fall back or come back mechanism. These aren’t public servants who have no skin in the game.

    Yet “we’re all in this together”!
    Or so they say …

  25. MatrixTransform

    Hi Lee.

    similar business.

    We specifically rotated out of wet concrete and into maintenance and retrofit about 4 years ago.

    I could smell the squeeze coming

  26. Astrid van den Akker-Luttmer

    Mack, #3536266 I agree with you. Furthermore, to prevent depression in people, they can have family and friends gatherings showing their temperature (have the device with them to show) before joining the get-together. Ruining a whole society is not on.

  27. Nob

    Lee
    #3536355, posted on August 5, 2020 at 11:40 am
    Thanks Tafkas. I run an electrical business. My bread and butter has been electrical control systems for manufacturers. My customers have halted all their projects. We’re only doing breakdowns. Turnover has gone from 250k a quarter to 8k. Now I’m tendering on local government projects

    A special kind of hell, but when it’s the only game in town, what can you do?

  28. Squirrel

    Lovely work, thank you – the virus will do much to make Marxist monopoly capitalism (more of) a reality in Straya.

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