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Competition and outcomes need to be improved for small businesses and consumers through regulation and digital platforms, according to the SME advocate.
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Competition policy must consider SMEs, says NSW small business commissioner
04 October 2024
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The NSW small business commissioner (the commission) has called for the need for right-sized regulation and a greater focus on the importance of digital platforms in a submission to the Revitalising National Competition Policy (NCP) consultation paper.
According to the commission, the submission identified key opportunities to increase competition and improve outcomes for small businesses and consumers.
This included proposed strategies surrounding SME regulation and supportive measures for digital platforms.
“The submission noted the distinct challenges faced by small businesses in competing with larger companies, highlighting issues such as limited resources, economies of scale and regulatory frameworks that do not meet their needs,” the commission said.
In the submission, the commission outlined support for the review of NCP as an opportunity to ensure relevant legislation, regulatory frameworks and market structures remain appropriate and promote competitive markets.
The commission said small businesses often experience barriers to entry or business growth which leads to less competitive markets and poorer outcomes for consumers.
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Consideration has been encouraged by the commission of how these barriers, including those associated with increasingly complex government regulation and requirements, might be addressed as “part of a revitalised competition policy agenda.”
NSW small business commissioner Chris Lamont said red tape and regulation were continuing to strangle small businesses.
“Small businesses are often at a significant disadvantage, not because they’re inefficient, but because regulatory requirements are seldom designed with their needs in mind,” he said.
“Small businesses are often at the bleeding edge of innovation – for markets to be competitive, it is essential these firms can compete on their merits, rather than being structurally disadvantaged by poorly designed regulation.”
The commission advocated for a more dedicated focus on the impact of proposed regulatory requirements on smaller firms by establishing a small business impact statement (SBIS).
The commission believes an SBIS would assist in better understanding the impacts of new regulations on small businesses and how disproportionate impacts could be avoided.
The submission also highlighted small businesses increasing their reliance on digital platforms, which impacts their level of business and sales if they are unable to use them.
Lamont said small businesses often contact the commission to express distress and concern surrounding being unable to contact digital platform providers when facing problems.
According to a commission survey, one in four respondents indicated they were conducting operations or selling products or services on a digital platform or online marketplace.
Of those leveraging digital platforms, one in two said that losing access would have a severe or major impact on their business.
Lamont said many businesses depend on these platforms to access their markets which exposes them to significant risks.
“Small businesses are becoming increasingly reliant on digital platforms to buy, sell, advertise and communicate with their customers and it is a timely opportunity to consider whether existing policy frameworks are fit for purpose,” Lamont said.
The commission said significant change for small businesses would be achieved with the enforcement of an SBIS and an improvement in dispute resolution and customer support with digital platforms.
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