Insolvencies are soaring as the Business Connect support program winds down

ABC NEWS (Australia)

The NSW state government program that connects businesses to experts on the taxpayers' dime is being discontinued. A review of Business Connect found the benefits outweigh the costs, and that it helped businesses survive. The program's end comes as business insolvencies are at longtime highs.

Transcript

00:00Eva Dello had the product know-how but needed help running the family business.

00:08The joinery company in Sydney's south was struggling.

00:11And just because someone starts a business doesn't mean that they're good at everything.

00:18She sought guidance from a business coach in 2017 under a taxpayer funded program.

00:24We would have been way far behind where we've gotten to now with our Business Connects help

00:28by possibly years.

00:32The business pivoted to repurposed timber, trebling its turnover and helping it grow.

00:38More than 60,000 small businesses have been helped by Business Connect since 2017.

00:44We know that the start-up failure rate is extremely high, it's usually about 50% up to the fifth

00:50year mark.

00:51Owners don't have to pay to speak to experts.

00:54The program cost taxpayers $10 million last financial year, but now it's ending September

01:0130th.

01:02It's not absolutely essential.

01:04And I've got things that you cannot defer or delay, like emergency departments, policing

01:10in the state, as well as public schools.

01:13According to a 2021 review, for every dollar the program cost, $1.50 was returned in benefits.

01:20It gets start-ups happening.

01:22It stops existing businesses going bust.

01:24It creates jobs, it creates innovation, it creates confidence.

01:28And the government is axing all of those.

01:29In New South Wales, around 10% of businesses are on the verge of either selling up or closing

01:35down.

01:36But for those helped by Business Connect, that statistic drops down to just 1%.

01:41The majority of people using it are women.

01:44The most disadvantaged start-up founders who benefit the most from it.

01:48The program is being wound up as insolvencies reach long-time highs.

01:54So many small businesses will have to look elsewhere for help.

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