Social enterprises can help with the budget bottom line. Here’s how

Press Release date: April 20, 2023

The social enterprise industry stands to help the Federal Government continue to provide an environment where outcomes for Australians are prioritised without hurting the budget’s bottom line.

Embracing a Social Enterprise National Strategy when he hands down his first full budget on May 9, Treasurer Jim Chalmers can secure a dirt-cheap budget repair option that carries zero political risk, while the government contemplates major policy fights to pay down $1 trillion in debt.

Just to set the scene, everyone knows the big things the government needs to do in order to fix the budget: expand the tax base. There is no silver bullet, so dozens of bronze ones will have to do the trick. Everything that should or could be on the table includes more politically easy reforms, such as slugging the gas industry for more royalties through to more politically challenging ones regarding property or the family home. Reform, in some form, is essential to creating a sustainable budget and economy. Will they do all of this? No, at least not yet.

To illustrate the point, the other major policy fight has been superannuation tax concessions. We all saw what happened when Chalmers dipped his toe into the water to recover $2 billion a year from superannuation balances above $3 million (from 2025). There was a disproportionate media blowback, until the data came out that it impacted less than 90,000 people and most Australians agreed with the change. It’s fair to say a policy fight that negatively impacted much larger swaths of the Australian population and vested interest would create a much larger blowback, and ones that aren’t supported by so many households.

So how do we keep improving outcomes for everyday Australians when the country isn’t ready to have a conversation about how to fund the challenges of the future long-term? Social enterprise is well placed to help.

It’s essential to clarify that social enterprise is often confused with not-for-profit organisations and corporate social responsibility, despite having major differences, which doesn’t help.

Not-for-profit organisations rely on grants, donations, and government funding to operate, while social enterprises generate their own income, which is then reinvested into their social mission.

On the other hand, corporate social responsibility (CSR) is primarily a business strategy that aims to align a company’s operations with ethical and social values. What sets social enterprise apart is the social mission that sits at the core of the company’s business model. When companies claim the same thing in their CSR, it’s marketing.

The social enterprise sector in Australia contributes $21.3 billion to the economy each year and provides over 206,000 jobs, according to last year’s figures from Social Enterprise Australia. It has the potential to boost activity in areas that lift the burden on increasingly expensive social services without costing the budget.

As detailed in its pre-Budget submission, Social Enterprise Australia is pushing for a strategy that is co-designed and powered by a partnership between the sector and the government.

“We see this as being challenge-led, focusing on national priorities where social enterprise can make a significant contribution, in the areas of environmental care, people-centred services, access to decent work, and community-led innovation,” the submission said. These are all core and increasingly expensive government deliverables.

Preliminary work conducted by Griffith University’s Yunus Centre concluded that a strategy would ultimately improve performance, competitiveness and impact of individual enterprises; achieve sector growth through increased diversity, depth and distribution of activity; amplify the impact resulting from improved sector coordination and collaboration and; increase influence on mainstream business practices and public sentiment.

A strategy is needed because the sector is fragmented, poorly coordinated, and poorly defined. Each state has its own definition, requirements, and support for social enterprise. This dysfunction must change, and a national legal structure would go a long way towards streamlining the sector and improving its contribution for everyday Australians and their governments.

When we first outlined our business model, we flirted with the idea of positioning ourselves as a social enterprise. Ultimately, it was decided we didn’t fit the definition adequately and so pursued a more traditional tech-startup path. But the whole exercise left us with the strong impression that clarity and support for the industry would be enormously beneficial. And this is needed.

Recently, ProBono, the industry’s one dedicated publication, closed its doors, leaving SmartCompany as the only publication with a dedicated focus on the sector.

The federal government’s appetite for reform appears to be there, as Dr Andrew Leigh MP, assistant minister for competition, charities and treasury, acknowledged earlier this month, “What you do has support from across the parliament. For those on the business side, you’re celebrating businesses. And for those who go into politics to help the most disadvantaged, you’re doing just that. The work of social enterprise spans the economy.”

With so much on the to-do list and scant detail on how it’ll be paid for, the government needs every organisation that shares its mission to row in the same direction.

Rowan Wilde is the co-founder of social fintech HelpPay.

See the original article here - Social enterprises can help with the budget bottom line. Here’s how

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Alexander Liddington-Cox 

E: alex@mediadistillery.com.au 

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