IF creating the Economic Development Board is the Rann Government’s calculated move to embrace big business, it certainly hasn’t done small business in South Australia any favours. The EBD report has been endorsed by Government as a framework for the economic advancement of SA – though some EDB recommendations lack substance and a real understanding of the role of government and the public service, specifically in supporting a struggling small business sector.

Recommendation 67 within the EDB report has asked for “functions provided by the former Department of Industry and Trade and now mostly carried out by the Department of Business, Manufacturing and Trade be examined rigorously with the intention of achieving substantial restructuring and downsizing”. As the department represents the one true area of the public service providing logistical and practical assistance to small businesses, the authors of Recommendation 67 hardly represent true understanding or experience of the small business sector. Neither does it echo the ALP’s 2002 election policy speech, which said: “The business potential of emerging, home-based enterprises and the challenges being faced by family businesses are frequently overlooked. Small business is crying out for better policy and service delivery by the State Government. A future Labor Government will work to help small business to thrive.”

Regardless of the ALP’s Plan for Small Business, the EDB determined that the DBMT was to be significantly downsized. Minister Rory McEwen quickly put a Review Team in place to provide him with the rationale – though ABS statistics signify that small business forms a significant part of SA’s economic life. SA has 72,122 businesses; 81 per cent employ fewer than 20 people. The Adelaide Metropolitan Area Consultative Committee says that 66 per cent of small businesses within its region employ less than four people, accounting for 18 per cent of total employment in the region – and many of these businesses have received assistance from the Department through its Centre for Innovation, Business and Manufacturing.

The entire review of the Department for Business, Manufacturing and Trade was completed by only three people inside six weeks. The contribution of public servants knowing what this department does was confined to a hastily convened one-hour meeting with the Review Team. Those unable to attend had to elect spokespersons to speak on their behalf. Presentations were confined to two minutes, expiry of the allotted time being indicated by the ringing of a bell.

While the review team had been requested to make recommendations to the Minister in relation to the Department’s strategic role, functional responsibilities and structure, a memo from the upper reaches of the Department sent to the minister commented that “…the Review does not offer any recommendations on the strategic role of the department…and the absence of a strategic framework makes it difficult to assess the proposals.”

The memo addressed six inaccuracies and unsubstantiated statements on the part of the Review Team. One claimed that a culture existed within the department that “encouraged and indeed nourished unacceptable behaviour and fiefdoms”. The Review Team was apparently challenged by the Department about this but was unable to proffer examples.

Almost simultaneously, a meeting of about 100 consultants was called at the Centre for Innovation, Business and Manufacturing on October 22, ostensibly to discuss how best to market the Register of Business Consultants. These people are accredited to consult the government sector and, with CIBM assistance, consult to SA’s micro and small business community in such areas as marketing, distribution, manufacturing and administration. In essence, they provide the maps and tools for small businesses with limited resources to overcome logistical difficulties and continue driving their business forward. Without such support, many such businesses experiencing difficulties would fail.

Acting CEO of the Department for Business, Manufacturing and Trade, Mr Kevin O’Callaghan, arrived at the meeting to inform the consultants that CIBM and the rest of the department had been rigorously examined and was about to be restructured and down-sized – meaning that the role of consultants would be slashed. They were told the rationale for Recommendation 67 was that various business and industry associations should deliver assistance to the small and micro business sector, not the government.

The upshot is that a new department – the Department of Trade and Economic Development – is to be formed in May, 2004, to serve as a policy-setting agency, not a service delivery agency. The belief that business should look after its own affairs is, according to various people in the know, a view jointly held and promoted by the Government and by Business SA. However, one wonders what level of assistance will be provided to the small and micro business sector by Business SA when CIBM is finally wound down.

Business at the top end does and can look after its own affairs. However, organisations such as Business SA are not geared, motivated or funded to help tiny players struggling with myriad issues and problems. It would seem unlikely that small business associations would have the required money, time or resources to replicate the existing levels of public sector support.

Minister McEwen acted quickly to commission a Review Team for the Department, though it took him much longer to appoint a new CEO. (The reign of former CEO Dr Roger Sexton was incredibly short. Dr Sexton, previously with Beneficial Finance, is to run the announced but not yet sighted Venture Capital Board). A new temporary CEO has been announced – Stephen Haines, on leave from the local government sector – though this was apparently Rann’s choice, not McEwen’s.

And where has the Opposition been while a crucial Department has been gutted? Well, Rob Lucas put out a press release ...

What will be the likely consequences? It would seem that removing essential services for small businesses without ensuring their replacement would leave a gaping hole – into which a significant number of small businesses in this State could be expected to fall and perish.

The ALP’s Plan for Small Business declares: “The problems faced by small business, such as the high cost of power, the costs of complying with the GST and other issues discussed in this policy document, together with the fact that small business provides this State with some of its best opportunities for jobs and growth, require that the small business sector have access to the highest levels of decision-making in Government.”

If gutting the CIBM is the result of having access to the highest levels of decision-making in Government, perhaps it would have been more beneficial to have been ignored.