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Published 27 November 2012 05:14, Updated 30 November 2012 04:55
Family businesses such as Kennards Hire say say the sector has a number of advantages over other businesses, including a focus on long-term planning, a commitment to the community and the ability to be nimble and quickly innovate due to simple decision-making structures.
Family businesses have called for greater recognition and government assistance as part of a federal parliamentary inquiry.
While there is disagreement about what defines a family business and scarce research into the sector, such businesses are believed to make up about 70 per cent of businesses in Australia, employ more than half the nation’s workforce, and have a combined wealth of about $4.3 trillion.
Submissions to the Family Business in Australia inquiry by a joint parliamentary committee close on Friday, November 30, and 26 have been received. They recommend the appointment of a minister for family business, changes to tax rules surrounding employee share schemes, and simpler ways to transfer ownership from one generation to the next without incurring a large capital gains tax liability.
There are also calls for dedicated collation of information on the sector by the Australian Bureau of Statistics, although the sector’s wish for privacy may be an obstacle.
Family businesses and industry groups say the sector has a number of advantages over other businesses, including a focus on long-term planning, a commitment to the community, and the ability to be nimble and quickly innovate due to simple decision-making structures.
“Because it is OUR money we have invested or borrowed personally we are more risk averse,” writes Andy Kennard, director of Kennards Hire, in a submission.
But these strengths can become weaknesses when a patriarch or matriarch refuses to let go of the reins, or when payment structures and benefits reflect family obligations rather than best business practice.
Industry group Family Business Australia called for government agencies to refer family business operators to programs addressing governance issues and, in particular, succession planning. Many family businesses were not planning this early enough, FBA says.
“Australian governments have thus far failed to recognise and appreciate the importance of the family business sector, let alone introduce innovative policy designed to leverage the vast patient capital invested by Australian family businesses,” FBA says.