The Weekend Australian, June 24, 2017
Kate Carnell is a former chief minister of the Australian Capital Territory and now the Small Business Ombudsman. She believes politicians should be able to invest more freely, small business owners must engage earlier with super and advice at all stages is crucial for investors.
You have gone from being a politician to an ombudsman. Would you recommend politics as a career? How does it stack up financially?
You don’t become a politician for the money. You have no personal time and you’re in the public arena all the time, but it’s very fulfilling.
One of the biggest difficulties for politicians is they have no capacity to play with investments because of potential conflicts of interest. It’s a real issue and it’s not right. Fundamentally, we’re saying to people they will take less money to work seven days a week, and with the investments you may have already put together you’ve got to put them into a blind trust, take your hands off them and hope for the best. Anything you do buy will be known to the public and potentially appear on the front page of the paper.
We’ve got to find a better way to do this because we want our politicians to be successful. They have to make lots of sacrifices and so do their loved ones. There needs to be a way to encourage the people we want into the political arena.
Tell us about some of your first investments
My Dad encouraged me to buy a small shareholding portfolio as a teenager, which I enjoyed. I bought my first pharmacy when I was 25, my second at 28 and two more after that. It’s good to invest in something you know something about.
My best investment was buying property in Sydney 15 years ago. The worst was opening a pharmacy in Cairns eight weeks before the pilots’ dispute started in 1989, when nobody could fly anywhere in Australia. I kept my pharmacies for a while when I first went into politics but had to sell them. As Minister for Health in the ACT there was a perception that anything we did in the portfolio could cause a potential conflict. Running businesses as a politician is fraught. I took a financial hit when I went into politics and a bigger one when I had to sell my business.
What is the Australian Small Business and Family Enterprise Ombudsman? What do you do?
We provide small businesses and family enterprises with assistance if they find themselves involved in a dispute. We also provide a voice to ensure the concerns and ideas of small business people are heard by politicians at all levels so that beneficial policies and regulations are put in place.
What are the big mistakes small business people make?
Understanding and managing cashflow can be a problem area. Unfortunately there are many small business people who are good at what they do, but they go broke because they’re not good with cashflow. It’s important to talk to other people and not be too insular. People should join support organisations like a chamber of commerce.
It’s important to not forget personal superannuation as well. We know that small business owners have less super than other people. It’s because they rely on their business to be their super and they tend to put money into their businesses, not their super funds.
Your father was a small businessman? What did you learn from him?
My father was in the building industry and saw lots of ups and downs, swings and roundabouts. He kept his core staff together over many years. You also learn to do something you’re passionate about. All people who do well in business are passionate about what they do.
From where you sit in your role as ombudsman do you have any insights on what ordinary, thoughtful Australians should do or not to with their investments and financial decision making?
Get advice. Everybody is different and we all have different appetites for risk. We need to educate Australians that a small amount paid into super regularly is worth a lot. Even $20 a week can make a huge difference in a super fund. As it stands, too many of us see super as something to consider in the future. It is still seen as something so far down the track for lots of people.
If you had a windfall $10,000 to invest where would you put it?
I would pay off any credit card debt I might have and put the rest into super.
From where you sit, is there anything people should do or not do before June 30?
Individuals should look at voluntary super contributions.
Small business operators should definitely take advantage of the government’s instant asset write-off extension. More businesses are now eligible to buy equipment (new or second hand) up to $20,000 and write it off immediately. The program enables small business to immediately deduct assets costing less than $20,000 instead of claiming deductions over a number of years. This is a welcome incentive for small business to invest, which provides benefits for the broader economy and employment.