Hands off, Rudd

When the Government cut the $1 billion Commercial Ready program in 2008, it whipped the rug out from under the feet of many small companies struggling to commercialise their technology just as the global recession was putting a torch to credit. Now fears are growing that the next budget in May could take another swipe at other programs to assist SMEs.

Business programs in the SME sector are an easy target, at a time when a “dent conscious” government is out there looking to slash and burn. It is a large, fragmented marketplace with many voices that are rarely heard.

When a program gets cut, only the affected people yelp and they don’t get a very big hearing, says SME expert Greg Hayes.

Innovation is particularly vulnerable because it is about our future, as Terry Cutler told me this morning. Programs around R&D, commercialisation, funding early stage start-ups, links between commerce and universities, business development and business health are crucial for tomorrow and therefore easily cut today.

Companies will need more encouragement to be innovative as we move into a period of lower growth, not less. The Government needs to ensure that no more of these programs are cut.

The Government has also forgotten about a major initiative that would assist SMEs that it talked about in the last budget but has slipped off the radar.

It should be put back on. If the Government redirected a pool of money through the contract and tendering process towards products and services produced by SMEs, it would provide a great boast to the sector and would not cost that much to implement.

Cutler has previously said that government procurement systems in Australia could be improved by moving closer to the US model.

“In the US a huge number of procurement contracts go to SMEs. It is vitally important to build an SME base, so we need to look at how you use your government spending such as procurement to create more opportunities for SMEs,” Cutler said.

One of the good things about the SME procurement scheme operating in the US is it changes the mindset of bureaucrats. “When you put something out to tender with a pre-defined solution on 1,000 pages, only one or two providers can respond. But if you say “here is the problem, who can provide the solution?” anyone can come up with the best, cost-effective way which can turn into a massive driver of SME technology and innovation.

“It also provides the SMEs with contracts, not grants,” he says. Now surely that is going to get the Government’s interest.

Cutler acknowledges that it is hard work trying to change the culture. “The challenge is to change the culture: no one ever got sacked for buying IBM.”

The Australian marketplace is also smaller and there may not be as many “solutions” to the problems as in the US.

But as Cutler says, it all comes down to leadership. Plus we don’t have to take the US model holus bolus. In the UK they have taken the best bits and adapted it to their particular marketplace.

So let’s make sure at the May budget that it is “hands off” SME innovation. And we see the introduction of a great new revenue neutral scheme that could really assist SME innovation.