Small businesses are being swept under the rug in favour of unions and large funds, but are vital to the Australian economy.
This is according to Michele Levine, the CEO of Roy Morgan Research, in light of the recently released state of the nation report.
The report casts a spotlight on the dramatic changed to the financial services industry since the 1997 Financial System Inquiry (FSI) and is compiled using 17 years’ worth of consumer-focused financial metrics.
Levine spoke to Wealth Professional
about the results of the report and what needs to be improved for the future.
She had significant concerns about small businesses and small market cap companies.
“The super system has taken a huge segment of money from these. It’s creating a system that’s good for big superfunds and unions, but it’s done nothing – it’s [been] negative – for small market caps and small businesses,” she said.
This could spell disaster because although high risk by their nature, they also provide a safety net for any economy.
“Countries survive, flourish and weather tough times when small and medium enterprises rise to the occasion,” Levine said.
Wealth management company Yellow Brick Road (YBR) is also extremely concerned about the fate of Australian small business and highlighted this in their submission to the FSI.
More needs to be done to ensure that small businesses that have highly variable incomes are able to save enough for retirement, it said.
YBR urged the FSI, headed by former Commonwealth Bank boss David Murray, to address the inequality in the superannuation system.
The submission said that managing cash flow is critical for small businesses. Consequently, advice needs to be made more affordable by allowing tax deductibility for people earning up to $75,000, and by simplifying the regulations so that costs for small business seeking professional financial advice are lowered.
“The Australian Government should amend contribution limit rules to average up to a cumulative five year period and allow pooling of contributions with a spouse,” it said. “This will particularly assist women, small businesses and other Australians that have variable incomes.”