Small business should not expect anything positive in the Federal Budget next week according to accountancy body CPA Australia, as the Budget belt-tightening continues with the confirmation of cuts in defence spending and parenting payments.
Gavan Ord, CPA Australia’s small business policy adviser, told SmartCompany the Federal Government was intent on delivering a budget surplus “come hell or high water” so the Budget would involve would cutting expenditure, moving other expenditure to the future and engaging in revenue raising.
“For small business what that means is don’t expect this Budget to deliver anything really positive for you,” says Ord.
“The general economic impact of the Budget will be contractionary for small business.
“It will affect how people spend money and if you take out some of the Government’s spending that will flow through to the rest of the economy.”
Ord says the Government wants to deliver a Budget surplus for political not economic reasons.
“It actually does not matter for the markets or the RBA,” says Ord.
“If the economy is not going well, really the Government should be looking at an expansionary budget.
“There is no talk in Australia about how we are going to support growth in the economy.”
CPA Australia is predicting the Budget will include measures designed to encourage productivity but warned these measures were likely to fall short of cutting infrastructure bottlenecks and an excess of regulatory red-tape.
“We are guessing there will be some skills packages and things like that, but because of the surplus fetish there are a whole lot of piecemeal approaches to approving productivity.
“What we need is a more thoughtful, root and branch measures to improve productivity.
“Last year the Budget included a few things around apprenticeships and vocational skills and we expect to see that again.”
Ord says broader, structural change is needed to genuinely help small business.
“You have a lot of manufacturers out there struggling because of the high Australian dollar and the cost of doing business; we really have to look at our competitiveness and how we make Australia a global economy,” says Ord.
“We need to look at structural change but there is no talk about what the end picture looks like after structural change.
“This is not being addressed and we don’t expect this Budget to address that.”
One of the areas predicted to be cut in Tuesday’s Budget is defence spending, which will be sliced by more than $4 billion according to The Australian.
Prime Minister Julia Gillard and Defence Minister Stephen Smith confirmed they would delay the purchase of 12 multi-role Joint Strike Fighters for the RAAF by two years, which would save $1.6bn in the short term.
Parenting allowances and welfare payments for people travelling overseas are also set to be cut.
The Government is expected to scale down parenting payments delivering $700 million in savings by cutting support to single parents once their youngest child turns eight.
Welfare recipients will also lose benefits if they travel overseas for more than six weeks.
Assistant Treasurer David Bradbury told ABC Radio that the Government believed in the importance and the dignity of work for all Australians.
It also wanted payments to be thought of as assistance, rather than as a disincentive for people to participate in the workforce.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
