Five years on: Kate Carnell shares her proudest achievement as Small Business Ombudsman

When Kate Carnell reflects on her five years as Small Business Ombudsman, she says her proudest achievement has been in an area that was somewhat unexpected. 

Speaking to SmartCompany from her Canberra office on Monday, as she starts her final week as Ombudsman, Carnell recalls how when she started in the role she asked small businesses what they most wanted her to focus on.

She expected the answer to be industrial relations, but “they said payment times, by a long shot”. 

The fact that payment times for small businesses is now a major issue, and that measurable improvements have been made, is at the top of Carnell’s list of highlights from serving as the first Australian Small Business and Family Enterprise Ombudsman (ASBFEO).

While outliers remain, small business payment times have broadly improved over the past five years, led by a series of initiatives and policy changes.

The Payment Times Reporting Scheme is now in place, which requires large businesses to disclose their supplier payment times. The federal government has moved to payment times of 20 days for small invoices or five days for e-invoices — and state governments are following suit. Meanwhile, the Business Council of Australia developed its own payment times code of conduct. 

“None of those things were there before my office started to rattle the cage, as we say,” Carnell says. 

“I think in the end the government will legislate [on payment times], as there will be enough recalcitrant businesses that legislation will be required. But it’s good that so many have stepped up,” she adds. 

Carnell notes that significant improvements have also been made in the banking space in the past five years. She has led efforts to make banking contracts fairer for small businesses. 

“I remember being somewhat blown away by clauses saying things like, ‘we can change any term or condition at any time we feel like it’,” she says. 

Those catch-all phrases are no longer prevalent and small business banking contracts now include summary pages for business owners. 

Carnell’s advocacy in this area was part of a broader push to improve access to capital for SMEs, and she nominates the recently established Business Growth Fund as one successful outcome from that work. 

Similarly, the federal government’s recent changes to insolvency processes for small businesses are “off the back of work we’ve done”.

Anne Scott and Kate Carnell during ASBFEO hearings into the banking sector in 2016.

Changing hands

On Thursday, former small business minister Bruce Billson will become Australia’s next Small Business Ombudsman. Carnell says Billson will continue to push for the 150-odd recommendations the ASBFEO office has made during her tenure. 

Those recommendations have been developed through seven major inquiries, four reviews and seven research tasks. To date, Carnell says 23% of the recommendations have been implemented and another 10% “mostly implemented”. 

“We do these things, but we don’t just put them on the shelf — as so often happens in government or the government space,” she says. 

A further 58% of the recommendations have seen “positive movement” or agreement from the government. Carnell says her office will continue to put “pressure” on the government and others to implement as many of those as possible. 

At the top of the list are proposed changes to unfair contract terms and franchising, which have support but are not yet implemented. 

Government procurement will also be a priority for the ASBFEO office this year, says Carnell, with the Commonwealth needing to make significant improvements in this area to help build capacity among Australian businesses. 

“If we give them more real work, not just sandwiches and paperclips, that will help them grow,” she says. “And it will deliver something really important in Australia, which is more Australian-owned medium businesses. 

“We have some great small businesses, and a number of big multinationals, but there is a gap in the middle. What we haven’t done enough of in Australia is help our small businesses become medium-sized businesses.”

Carnell also nominates tax reform and industrial relations as ongoing priorities for ASBFEO, and says regulation technology has the potential to improve small business industrial relations compliance, with or without legislative change. 

Finally, small businesses can expect to see Billson continue Carnell’s work to support the mental health of small business owners. 

“We think over the next 12 months, in many ways, it will be more difficult for small businesses,” she says. 

“Last year was horrible but now as we start coming out of COVID, I think a lot of businesses will struggle; they’ll struggle with cashflow, they’ll struggle with the post-COVID environment. And we need to be supporting businesses through that.”

Incoming Small Business Ombudsman Bruce Billson. Source: AAP/Tracey Nearmy

SMEs are “the boss”

Carnell says she’s never before taken a break in her working career, but she won’t be leaping straight into another full-time role just yet. 

Instead, she’s looking forward to continuing working in areas she’s passionate about, as deputy chair of Beyond Blue and a director of the Australian Made Campaign. She also sits on a number of advisory boards and will be keeping her eyes open for more opportunities. 

It’s “surreal” to be handing over the Ombudsman’s role to someone new, says Carnell, but it would be harder to leave if her successor was someone else. 

“If there’s someone who is not going to drop the ball, it’s Bruce [Billson],” she says. 

“He will be different to me, which is entirely appropriate, but he will be really enthusiastic and passionate.”

It’s also somewhat appropriate that Billson established the Ombudsman’s office to be an independent role when he was small business minister, says Carnell. 

This independence is crucial, she say. Without it, the office would lose its relevance. 

“Because it is an independent role, it does mean you get to not worry too much if the government of the day doesn’t like you, or the unions don’t like you, or the opposition,” she says. 

“You know you’re doing what small businesses need you to do, or want you to do. You know who the boss is and that’s the SMEs.”