SMALL BUSINESS EFFICIENCY MUST RISE ALONG WITH PRODUCTIVITY
The Institute of Public Accountants (IPA) is calling for a rise in efficiency of the small business sector through its Australian Small Business White Paper recently released in partnership with Deakin University.
“Productivity and efficiency go hand-in-hand and both need a boost if we are to address Australia’s fiscal status and protect our standard of living,” said IPA chief executive officer, Prof Andrew Conway.
“The research that underpins our 2018 version of the Australian Small Business White Paper found a number of disturbing factors when it comes to business efficiency.
“Amongst the findings is the fact that the average level of efficiency in the Australian business sector is 0.81 per cent (the median level is at 0.85 per cent). This implies that value-added in the business sector could potentially be increased by 15 to 19 per cent using the same amount of capital and labour inputs and the state of technology.
“Of the five classes of business operating below 30 per cent efficiency, four are in mining with sales of A$1 million to A$2 million. This becomes worse when looking at the 12 classes of business operating below 40 per cent efficiency, with ten of them being in mining.
“Overall the three industry sectors with the lowest average efficiency are: mining, manufacturing, and electricity, gas, water and waste.
“Our White Paper recommendations include:
- Encourage business start-ups to stimulate efficient, dynamic resource reallocation
- Conduct a sector review of the mining industry
- Conduct a competition review of the mining, manufacturing, and electricity, gas, water and waste industries
- Introduce initiatives to enhance the technological absorption rates in ‘older firms’
- Introduce supply-chain efficiency initiatives
- Ensure the education system produces enough STEM (science, technology, engineering and maths) graduates and that the business sector is capable of absorbing them at an efficient rate,” said Prof Conway.
For more detail on the Australian Small Business White Paper go to: https://www.publicaccountants.org.au/news-advocacy/small-business-white-paper