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Australia is less likely to invent things because innovative small businesses struggle to get a bank loan, a Reserve Bank official says.
WiFi technology, the ute, Victa lawnmowers and the Hills Hoist clothesline are among Australia’s best-known inventions over the past 90 years.
Smaller companies are now more likely than larger ones to come up with big ideas if they focus on being innovative, RBA assistant governor Brad Jones said.
“The intensity of innovation is much higher for small and medium-sized enterprises (SMEs) that are innovating,” he said at a Council of Small Business Organizations summit on Thursday.
“To put it bluntly, these SMEs are more likely to go for innovation.”
But Dr Jones said small businesses were less likely to get a bank loan, even though surveys showed more than half of them were trialling innovative ideas.
Australia is less likely to invent things because innovative small businesses struggle to get a bank loan, says Reserve Bank official (pictured is an image of a 1950s Victa lawnmower)
WiFi connections, the ute, Victa lawnmowers and the Hills Hoist clothesline are among Australia’s best-known inventions over the past 90 years (pictured, a 1934 Ford ‘coupe utility’ with designer ‘Lewis’ Bandt).
“The bigger issue is that small businesses are riskier propositions for capital providers,” he said.
Banks like them were nervous about lending to small businesses because they were more likely to go bankrupt within a year of starting.
“Survival rates bear this out: whether new or established, small businesses are more likely to go out of business in a given year than their larger counterparts,” he said.
“The particularly low survival rates among young small businesses are consistent with the ‘up or out’ stage of their development, where they are experimenting and succeeding, or failing and exiting: either fail or fail.”
Brad Jones, assistant governor of the Reserve Bank, said small and medium-sized enterprises (SMEs) were now more likely than large companies to come up with big ideas if they focused on being innovative.
In February, a further 413 companies entered administration, an increase of 74 per cent on January, Australian Securities and Investments Commission insolvency data showed.
In February, a further 413 companies entered administration, Australian Securities and Investments Commission insolvency data released this week showed.
The monthly count of 968 was 74.4 percent higher than January’s level of 555.
Australia has also been in a per capita recession since the middle of last year, which meant economic growth per job has been slowing.
In recent years, Australia’s productivity levels have also slowed, with output per worker declining 0.4 per cent last year.