Dick Smith: Sydney small businesses doomed to sell nothing but coffee unless Lucy Turnbull has a solution

SmartCompany, December 15 2016

Entrepreneur Dick Smith has called on Lucy Turnbull, head of the Greater Sydney Commission, to address the city’s rapidly growing population or face the consequences of fewer jobs and less prosperity in the region.

In an open letter published in national newspapers today, Smith tells Turnbull: “You are far better educated than the rest of us – so you must have a plan”. Smith argues the “perpetual growth” in Sydney supported by the country’s major political parties is unsustainable and is having a negative effect on house prices and employment.

This morning Smith told SmartCompany that if Sydney continues to grow at its present rate, small businesses in the city will be doomed to sell nothing but coffee.

“We’re all just going to be selling coffee to each other, because we have 10 million coffee shops,” Smith says.

He believes the small business community in Sydney will continue to face tough conditions, with an increasing population meaning too many people are trying to start similar businesses within a limited area.

“There’s too many people and that makes it far more difficult to be successful. You have too many people trying to start small businesses,” Smith says.

Smith, who told SmartCompany earlier this year he believes his own business, Dick Smith Foods, is doomed to fail because of the rise of international discount grocers in the Australian market, says many business owners in Sydney agree with his sentiments.

“Eight out of 10 business people I talk to tell me I agree. It’s just common sense that it’s basically only cancer cells that believe in perpetual growth,” he says.

In his address to Turnbull, Smith laments the major political parties’ immigration targets, saying he supports a lower migrant intake of 70,000 a year.

Smith says the world of politics is “completely irresponsible” and those in power know that highly concentrated growth across the nation cannot last.

“My attitude is that we’ve gone past the sweet point,” he says.

Read more: Dick Smith claims Aldi will send Coles and Woolies broke and says “extreme capitalism” is to blame

In response to Smith’s open letter, Sarah Hill, chief executive of the Greater Sydney Commission told The Australian that the level of growth seen in Sydney is a hallmark of successful cities around the globe.

The Greater Sydney Commission has a number of strategic focuses for the Sydney over the next 20 and 40 years, including its blueprint for the city, Towards our Greater Sydney 2056. “Our responsibility is to plan for this to make our city more liveable, sustainable and productive, rather than to debate the facts,” Hill said.

Is Sydney bad for small business?

While Smith’s concerns are centred on population growth and impact of this on Sydney residents, this year has also seen considerable tension between business owners and the New South Wales government over regulation, particularly in relation to Sydney’s lockout laws.

Some members of the SME community believe the government’s approach to the policy has shown a disregard for Sydney’s nightlife culture and contributed to the closure of some businesses.

In February, Freelancer.com founder Matt Barrie wrote a rebuttal of the lockout policies on LinkedIn, arguing recent political leadership had “systematically dismantled the entire night-time economy”.

“It is grossly unpopular and purely driven by religious ideology,” Barrie told SmartCompany at the time.

“It’s been absolutely devastating for small businesses.”

NSW Premier Mike Baird said at the start of December that the government would be implementing changes to the policy as recommended in the Callinan Review. This includes changing the cutoff time for bottle shop and alcohol delivery sales from 10:00pm to 11:00pm, and changing closing times for Sydney venues from 3:00am to 3:30am, with lockout times extended by half an hour from 1:30am to 2:00am where there is live entertainment. The changes will come into effect from February, but some in the business community in Sydney saw the reforms as tokenistic.

“Thanks Dad!” said nightlife culture group Keep Sydney Open, who have been protesting the lockout laws since their introduction and believes even with the changes, Sydney is still being left behind in “the global race” for a strong nightlife culture.

Long-term prosperity

When it comes to economic growth and prosperity, it’s not just NSW in the spotlight. Concerns over Australia’s long term prosperity also continue, with warnings that Australia could lose its AAA credit rating before the end of the year.

UK think tank The Legatum Institute’s most recent Prosperity Index survey ranks Australia as the sixth most prosperous country in the world, but analysts are keen to point out that of the 20 top countries listed, Australia is the only one to have an overall fall in its prosperity over the last decade.

Australia ranked second in the world for social capital, but Legatum pointed to the country’s falling economic diversity and a more inflexible labour market as areas of concern.

To Dick Smith’s mind, the lack of a plan on population, jobs and infrastructure will be a problem for business and prosperity in the long term, including for his own venture.

“The only venture I have is Dick Smith foods – and it’s doomed. Every year it has less turnover,” Smith says.

Discount retailers from overseas that operate with fewer staff will also compound the challenge, throwing down a challenge to even the bigger supermarkets, the prominent entrepreneur says.

“When Lidl comes in—well, they work by employing hardly any people,” he says.

Australians want an answer to the problems they see on a daily basis, Smith says, and he is calling on Lucy Turnbull to provide them in Sydney.

“What’s your answer to them? Are they wrong? Please tell us what your plans are for the future,” he wrote this morning.