Will the US election have an impact on Australia SMEs? A SmartCompany Q&A

After a seemingly never-ending campaign, the US presidential election is finally upon us. Overnight more than 100 million Americans will go to the polls, with Democrat candidate Barack Obama widely favoured to win the race for the White House.

But before the votes are counted, we thought a quick SmartCompany Q&A was in order to access the major policies of each candidate and how they might impact on Australian small businesses.

This election feels like it’s been going forever. How long has it been?

It’s been about 20 long months since the race for the White House started, although a big chunk of that was spent sorting out who would win the nomination for the Democratic and Republican leaderships. So far the candidates have spent around $1.5 billion on campaign advertising.

And after all that time and money, Obama is going to cruise to victory, isn’t he?

It certainly looks that way. The final Gallup poll showed Obama leading 53% to 42% among likely voters, while the latest odds from bookmaking firm Betstar have Obama a $1.08 favourite to win, compared with John McCain’s odds of $6.50.

So should we be happy with an Obama victory here in Australia?

There is certainly a lot to like about Obama. By all reports he is highly intelligent, articulate and calm and there is a strong feeling among US political commentators that he will put together a strong cabinet team to help bolster his government in areas where he may lack experience.

And for all the rhetoric, Obama does represent a big change from George W Bush’s administration, which has presided over an increasingly disastrous war in Iraq, the near-collapse of the US financial system, the total collapse of the US housing market, and a recession in the US economy.

Yeah, but Obama’s going to have to deal with those things when he takes office, isn’t he?

That’s true. Obama’s first term as president is going to be terribly difficult, particularly if the economy continues its downwards spiral. Economists and market commentators will be cheered by the fact that the Democrat has proposed a hefty $US190 billion stimulus package, including measures such as tax credits, energy rebates and handouts for companies that hire workers.

Anyway, it appears that markets have simply stopped listening to Bush. A fresh approach to these problems should bring some new solutions or at least some better ideas.

What about Obama’s policies for SMEs?

Small and medium companies in the US are a bit divided about Obama’s policies towards small business, and particularly his proposal to raise personal income tax rates for the top two income brackets to 36% and 39.6% (from 33% and 36.6%). While Obama’s campaign claims most small business owners will be unaffected by these tax increases, some SME groups have pointed out that the businesses that are affected are the high-growth companies that create jobs and economic growth.

Any other concerns for US small businesses?

Well, a Democrat in the White House could lead to more union activity, although American unions are in a fairly weak state at the moment.

Healthcare is another contentious issue for SMEs, mainly because the US healthcare system is in such awful state. Under Obama policies, all but the smallest employers would have to provide health insurance to their workers or pay additional taxes to the government. Small businesses would receive a tax credit to help offset the cost of health insurance.

Hmmm. Well, better them than us. What about Australian small businesses? What impacts will we see?

Obama’s economic policy will probably have the biggest impact on Australian SMEs in the short term. If he can manage to turn the US economy around faster than expected with his stimulus package and other measures, then global economic growth will rise and equity markets will receive a boost. That in turn will help the Australian economy and give confidence a nice boost.

The other big area is trade policy. Obama favours “fair trade” over “free trade” and has spoken about making changes to key US free trade agreements to include benchmarks on environmental and labour standards. Exactly how these trade policies might play out is a bit vague at the moment, but any moves back towards trade barriers would not be welcomed by Australian exporters.

But it’s important to note that in the short term at least, Obama is going to be fixated on fixing the economy, which should have positive implications for Australian SMEs.