Is the Federal Government out of touch (and at odds?) with the country’s single most important business demographic?

That seems to be the finding of independent research commissioned by Telstra Business and the Council of Small Business of Australia (COSBOA) to gauge issues of importance to small business ahead of the return of Federal Parliament.

The third annual Telstra-COSBOA Back to Business Study found that three-fourths of the SMBs are simply unaware of the Federal Government’s big-ticket Budget offering — a generous tax write-off for small to medium businesses — and their confidence in the Gillard Government dipped this year.

The disconnect could be devastating in the current, uncertain, economic environment because Australia’s 1.88 million small businesses constitute 95% of all companies and account for 30% of the country’s economic activity. The sector is also the highest employer — generating 3.6 million jobs, or 47% of private sector, non-agricultural employment.

SMB Commissioner, anybody?

A mere 24% of SMB owners and operators knew about last year’s announcement of an instant write-off on the first $5,000 spent on any capital asset from July. The Budget also offered SMBs a write-off on all other assets (except buildings) above $5,000 in a single depreciation pool at 30% and a reduction in the company tax rate to 29%.

That is not all that is wrong, according to the report.

Most SMBs expressed dissatisfaction with the performance of politicians in general and the Federal government in particular, sliding one percentage point this year to 38. The businesses rated the Gillard Government’s financial management at 39%. Labor was rated evenly on a range of other areas including climate change (43%), superannuation (42%), infrastructure (41%) and industrial relations (40%)

“With cost pressures such a concern to small business, it’s surprising so many are unaware of a tax write-off that could provide a real stimulus. There’s a clear message that the government needs to do more to sell its initiatives, while the low approval rating for all MPs shows they could be doing more to focus on the needs of small business,” said COSBOA CEO Peter Strong.

To help the government better communicate with the sector and help MPs, Strong recommends the appointment of a Federal Small Business Commissioner.

“Over the years I have had many MPs ask how to communicate more effectively with the small business people and a commissioner will assist the government, the bureaucracy and the elected members achieve that outcome,” he said.

Small business is finding the current economic environment tough and adjusting to counter the difficult environment, pointed out Telstra Business Group Managing Director Will Irving.

Over a third (35%) plan to cut their debt and another 27% intend to “put more time into networking with other businesses,” he said.

SMBs rated the European financial crisis as the biggest issue they could face in the next 12 months, with more than a quarter (27%) nominating it as the key issue of concern, ahead of a carbon tax (24%.) Also, 35% think the Australian economy has worsened in the last six months, up from 13% six months ago. The economy will worsen before the end of the financial year, assert 13%.

The Telstra SMB survey was conducted by StollzNow Research and included owners of 321 businesses from self-employed to those with 200 employees.