Good morning. It is a genuine pleasure to be here today. 1. Macro setting the role of accountants

Transcription

1 Andrew Conway keynote presentation to XeroCon 2015 Good morning. It is a genuine pleasure to be here today. 1. Macro setting the role of accountants Today, I want to put to you the facts around the accounting profession; its power within the economy, both in Australia and from a global perspective; and, further the role accountants play in supporting individuals and communities at large. Have you ever thought of where the Australian economy and in fact, our way of life would be today without the influence of accountants? In fact, where would the world be today without accountants? Potentially no trade, no retail no economy, no employment it would look pretty grim indeed. I am not trying to be an alarmist but rather paint the true picture of the critical role that you as accountants play in every day society. The accounting profession is held in the highest esteem of all other professions with a stronghold and mantle of the role of trusted advisor. In fact Australian accountants top the list of trusted advisors globally with 9 out of 10 Australians electing to go to their accountant for advice. Today s accountants are actively developing businesses; supporting families and communities. They are driving productivity, trade and economic growth. As accountants our work builds businesses; those businesses create economies and those economies sustain our existence. Looking at the Australian economy, we again can identify the importance of the accounting profession; particularly as trusted advisers to small business. However, the support that accountants provide small business goes well beyond the balance sheet and tax returns. As trusted advisers, accountants forge a unique relationship with their small business clients. In many regards they become a part of the small business owner s family. Many small businesses emerge from the passion and belief that the business owner has in their product or service; a belief they can make a success for them and their families. Sadly, there are many factors stacked up against small business that makes it tough to be successful. In fact, many small businesses throughout the lifespan of the business (and some of you here today, may have had direct experience with this) face financial ruin along with issues of depression family break-up and sadly in some cases the ultimate price of their lives. 1

2 Research conducted by Associate Professor Angela Martin from the University of Tasmania identified a number of unique risk factors for mental illness faced by small business owners. Amongst these factors are things such as: financial stress due to unpredictable income high levels of uncertainty where you don't know where the next job is coming from high job demands and multiple responsibilities in the workplace isolation and lack of social support high level responsibility to others including employees and family presenteeism where you continue to work even if you aren't well, because if you are away the business doesn't happen long hours which may be even a bigger problem than in the corporate world blurring of boundaries between home and work, finding it difficult to separate yourself from your work and not taking time out for yourself Business failure, which also carries a suicide risk. According to Martin s research, these types of factors can result in job stress or strain, which pose a high risk factor for the development of depression. And depression hits small business owners further, especially if they're unable to work and lose their source of income. The role of the accountant is to work with small businesses, understand the socioeconomic environment in which their clients are working and where possible, provide the necessary advice and guidance that ultimately helps the well being of the business and their owners. I cannot stress enough, the social and community impact that the accountant has in these circumstances. As I have said, it is not about a tax return, but the significant contribution that accountants make on every day lives, that I believe warrants hero status. It is the reason I am so proud to be a part of the profession. An example of that pride is when in 2009, the IPA (then the NIA) put a call out to its members to help small businesses back on their feet following the devastating Black Saturday fires in February of that year. We had established an accountant pro-bono register for Victoria for the victims of the bushfires. This was mirrored in Queensland and New South Wales which were experiencing devastating floods around the same time. Some 200 IPA members stood tall and volunteered their services to support small business recovery including assisting the ATO to help rebuild businesses and do record recovery. There is now a much greater task ahead when it comes to the role of accountants with small business. Let me explain. 2

3 2. Economic importance of small business and White Paper The IPA has long held affinity with small business, through our members; 75 per cent of whom work with the small business sector. However, we have also taken the conscious step to support small business for a primary reason that small business is the only sector that can protect Australia from a dire economic outlook. That may sound dramatic. However, let s look at the facts of where Australia s economy is heading. After more than two decades of prosperity driven by booming prices for mineral exports, Australia now faces the real prospect of a sustained fall in living standards. A deteriorating federal budget and higher levels of unemployment are just some of the symptoms. However, the real plight of the nation s economic outlook comes from the failure to lift business productivity for much of the past 15 years. That means that Australia s businesses collectively are barely more efficient today than they were at the start of this century. While big business may get the media s attention, we believe that lifting the productivity in the small and medium-sized business sectors is essential to avoiding recession and to driving a much needed new era of prosperity. However, we are talking about driving productivity rates that this Country has never experienced. Small business holds the key but they must be supported. The IPA, and through the IPA Deakin University SME Research Partnership, has worked over the past 12 months to establish the very first industry led Australian Small Business White Paper. The IPA is committed to facilitating ongoing discourse to ensure that when small business speaks, it does so with the support of industry and evidence, and on a platform that aims to boost productivity of our small businesses. In formulating the White Paper, we have taken insights from key industry, regulatory and political leaders and we have been around Australia talking to literally hundreds of small businesses. The White Paper makes a number of key policy recommendations that will drive greater efficiencies and enhance the productivity of small business. We recognise this will be an ongoing effort, especially when considering the current modus operandi of many small businesses. ABS survey data indicates some alarming factors that are currently impeding small business sector growth: Australian firms have been going backwards since 2007 on seven key indicators; 3

4 o Product differentiation o Profits o Productivity o Exporting o Outsourcing o Training o IT expenditure Only 1 in 7 businesses consider innovation important Only 1 in 8 businesses have an international market presence Many medium-sized, well established firms with the potential to expand into international markets consider only the national market as their end goal So when we speak of productivity, what does that mean? The New Zealand Productivity Commission has a succinct definition. Productivity is about how well people combine resources to produce goods and services. For countries, it is about creating more from available resources (raw material, labour, skills, financial capital etc). With the right direction and choices, higher production, higher value and higher incomes can be achieved for every hour worked. Productivity matters. The higher the productivity of a country, the higher the living standards that it can afford and the more options it has to choose from to improve well-being. How do we create an environment for small business competitiveness, productivity and sustainable growth? How do we unleash the potential of small businesses to produce goods or provide services that are faster, smarter and cheaper? Our White Paper makes a number of recommendations in these areas. Faster: We need to continue to unshackle small business from regulatory burden. Don t just look at the cost of regulation but recognise and respect that one of the greatest finite resources a small business has, is time. We need to prioritise unnecessary regulations that cost businesses time and eradicate them. Time saved can be reinvested into the business, enabling it to grow and enhance productivity by boosting output. Smarter: Immediate concessions should be granted to small businesses to enhance research and development capabilities with focus on deployment of technology to improve production processes, streamline operations and leverage data. Small business should also be given direct assistance to capitalise on social media commerce. 4

5 Cheaper: The Federal Budget in May of this year delivered a step forward in the right direction with some tax cuts but we still haven t gone far enough. Tax concessions to small businesses that undertake innovative practices deliver a productivity dividend or develop an innovative strategy to employ and up-skill new or exiting employees should be considered. This will lower the input costs and provide a greater productivity yield. The bottom line of our White Paper and what we are asking of government is to turn Australia into the best place to start and operate a small business in the world. This means a preferential taxation system, long term investment in technology, simpler industrial relations and, importantly, a focus not just on barriers to entry, but barriers to exit. 3. What do I need to do? So I ask of you today, what is our collective challenge? And, what is the role of the accounting profession going forward? We believe the role of trusted advisor; the traditional role of accountants over the centuries, now needs to take a step up and cement your role as the Trusted Productivity Advisor. Maintain the professionalism sought and the trust bestowed upon you by so many of your clients and support their growth and prosperity drive a common goal of productivity and Australia s future economic wellbeing. Small business needs our support and deserves our support. However, as accountants wanting to help drive small business productivity and growth, and in turn drive economic well being and sustainable, quality living standards, we can no longer act alone. We cannot afford to be a soloist or even participate in a trio or quartet, we need to bring the whole orchestra along and take centre stage. As accountants and trusted advisers we need to be in the centre of the ring of trusted advisers. To be successful in this economic mission, we need to provide a more holistic approach to our small business clients. If we have clients who struggle to market their services, we need to look further within the ring of trusted service providers and have them engaged with those clients. If clients are struggling with the pressures of business, we need to be able to support them with appropriate advice and point them in the right direction for assistance. We need to provide holistic advice that helps them operate faster, smarter, cheaper; to become more competitive; to grow and prosper. What I am asking of all of you today is to help drive this economy by being at the centre of trust for small business. We need your help to sell the message that not only is Australia open for business, but that Australian Small Business is entering its most exciting and important stage since our federation. If we do not 5

6 respond; if we do not get behind small business, the prosperity we have come to enjoy will be threatened. The IPA is committed to this cause for the benefit of all Australians. We want you to get on board and join us as champions of that cause. Please, support our White Paper, maintain professional knowledge and, understand and focus on the impact you have on society with every interaction you have with small business. 6