Small business set to lose on submarine contract

Small business is set to lose badly due to not awarding the submarine contract to Japan.

The competitive tender process focused only on one thing, sound in the tender process. No weight was given to military alliance or economic benefit.

Japan has been humiliated by the process, resulting in them issuing a comment that they deeply regret Australia’s decision.

At risk is $15.2 billion in exports Australia sent to Japan last year, this compares with $0.75 Billion sent to France.

Small business lives of this business directly and indirectly on the business created by these exports and Japan represents about 16% of exports. Australia’s small businesses have lived off Japan’s demand for coal, iron ore and beef for a long time. Newcastle and Lithgow, for example, many small businesses.

Japan will reconsider this relationship.

Japan believes their submarines have a sound advantage, but Australia didn’t ask the right questions. The Prime Minister seems to have abdicated himself from the decision, might I add the leader of the opposition has been AWOL.

In simple terms, supply and demand issues were ignored in the decision and we can’t be sure that sound issues were completely correct anyway.

Terry Murphy CPA BBus DFP, Director of TaxAssist Accountants

Date published 17 Jun 2016

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.