Bert Kelly, “Who needs literary licence?” The Bulletin, May 31, 1983, p. 118.

I recently received the pamphlet The Entrepreneur in Society, published by the Centre for Independent Studies. I usually read material from this source with excited approval but most of this was too deep for me. Eccles will lap it up, but he lives in an ivory tower while I have to wring a reluctant living from the land. I like plain food for brain and body. However, the pamphlet contained a splendid little article by Neville Kennard who speaks my language. He is an entrepreneur, as his father was; he lives in NSW and he hires out plant and machinery.

Kennard lists, in ascending order of importance, the difficulties he has had to face in being a business innovator.

The first and the easiest problem is identifying the opportunity. The second is acquiring — or buying — the expertise to tackle the identified task. Third is government intervention and regulation — and this, he says, is hard to handle.

Let the poor beggar speak for himself. He says:

I have identified 1600 bits of paper we have to handle for the government every year. A lot of them are involved with vehicles — registration labels and inspection certificates — amounting to about 600 pieces of paper each year. Then we have air receivers on air compressors. Each of these has to have certificate and it is supposed to be inspected annually by a little bloke who goes round with a hammer and taps it. This dates from the days when boilers were made with rivets.

An air compressor is a pressure vessel under the definition. I asked one of the inspectors if he had ever seen one blow up and he said that, in 30 years, he hadn’t.

We have to have sign licences for our signs and dog licences for our guard dogs. Each place of business has a factory licence. We have certificate of incorporation hanging all over the walls. We have fuel storage licences and hoist operator’s licences. If we want to put in a builder’s hoist, not only does the guy who has to operate it have to have a hoist licence but the guy who installs it has to have one. If we do the rigging work with scaffolding, those people have to have riggers’ licences.

We are supposed to have an explosive tool licence if we fire Ramset guns into walls. We have a diesel fuel exemption certificate because some of our fuel is used in air compressors where it does not attract road tax and some of it is used in vehicles where it does.

One of the funniest is the builder’s licence which we are required to have for building jobs and extensions we do on our own premises. I have never worked that one out. Is there a danger we will defraud ourselves?

So, setting up in business and particularly breaking new ground is beset with government regulations. Many of these are well-meant but they become awfully irritating when they come one after the other. They may, indeed, create employment but they also create difficulties for entrepreneurs.

However, Kennard says that taxation is the main barrier to innovation and this has been a common complaint for years. Again, let him speak for himself:

For a private company, with a pre-tax profit of (say) $100,000, company tax takes $46,000 of it. Inflation (you can’t include that if you play it by the book) probably accounts for $10,000 as we are only allowed to depreciate our equipment at original purchase price. That leaves $44,000 after-tax profit. You then have to distribute another 50 percent of it. If you don’t distribute because you want to keep it in the business you’ve got to pay 50 percent tax on 3o percent of the balance of $54,000, which amounts to $8100. In the end, you have got about $36,000 left to plough back to expand or to improve your business.

Inside every tax evader is likely to be an entrepreneur trying to get out. If he can’t, he will probably give up and go home — reckoning that the hassle is more than the game is worth. Many socialists will be glad because the very thought of innovators getting out in front and winning a bigger slice of the money cake makes the miserable.

The economic cake will then be smaller, so there will be less to share around; but socialists will be happy about this as long as we are all equal.

The present system suits those who are well up the business ladder and Kennard has become on of these. In his words:

The system as it now works, with extensive government intervention, discourages newcomers. It works for the benefit of those already in business because it is difficult, both from the regulatory and financial viewpoints, for new people to get into business. The result is that those of us already in business are less innovative and less bothered by newcomers and competitors that we would be if we had a freer economy.

If we are not careful, we are likely to end up all being equally miserable.