Budget 2023: Budget shows Labor – finally – recognises how vital small businesses and startups are to Australia’s economy
SmartCompany editor-in-chief Simon Crerar analyses what’s in the 2023 federal budget for small businesses and startups.
The Albanese government is forecasting the first surplus since 2007 in 2023-24, albeit small, making Jim Chalmers the first treasurer to get the budget “back in black” since Peter Costello.
It’s a pretty significant moment for the country. Going into the budget today, the political debate was whether the surplus lets Labor claim it is the better economic manager.
The jury has certainly been out on how much of a priority small business is to the government.
Handing down his first budget in October, Chalmers mentioned “small business” only once.
Well, what a difference seven months makes: tonight “small business” featured seven times in the Treasurer’s speech, and the budget is noticeable for a long list of plans to support SMEs, encourage startups, and invest in skills and training.
Measures include tax breaks for small businesses, $290 million in cash flow relief for SMEs via a $20,000 extension to the instant asset write-off, and a new $392 million program to help startups commercialise their ideas, in addition to energy relief and green energy incentive programs announced by the government in recent days.
Inflation is the primary challenge facing the economy, and the core focus of the budget overall. The government insists its cost-of-living package will not stoke the inflation dragon. Business owners will be watching nervously.
Small and medium-sized enterprises represent 99.8% of all businesses in Australia, contribute half of the GDP, and are critical to the nation’s economic prosperity and diversity.
The global economic outlook has deteriorated significantly since Labor’s election win last year.
Since early 2020, SMEs have shown remarkable resilience in facing unprecedented volatility. But the battle scars are real, and SMEs that have survived the COVID crisis are now battling high inflation and rapidly rising interest rates, leaving them typically low on resources and needing all the government assistance they can get. Does this budget help them?
The answer is yes. The Albanese government has acknowledged that economic conditions are hugely challenging for Australia’s small businesses, and delivers a range of support:
- The small business asset write-off will extend the instant asset program for one year, with a $20,000 threshold for businesses with a turnover of up to $10 million;
- A new measure will temporarily provide 2.1 million eligible small businesses with cash flow relief by halving the increase in their quarterly tax instalments for GST and PAYG in 2023–24. Instalments will only increase by 6% instead of 12%, reflecting the challenging economic conditions currently faced by the sector;
- The bonus tax deduction Small Business Energy Incentive will help up to 3.8 million SMEs save energy, upgrade their facilities and save on their energy bills. Up to $100,000 of total expenditure will be eligible, with the maximum bonus deduction being $20,000;
- The Energy Bill Relief Fund will provide electricity bill relief to around 1 million eligible small businesses, with a one off-reduction of up to $650 on their power bills; and
- The government will also fund measures to help protect small businesses against cyber threats through a $23.4 million program to help them train in-house cyber wardens, to be delivered by the Council of Small Business Organisations Australia.
And there are a range of programs and initiatives designed to reduce the amount of time small businesses spend doing taxes, aimed at saving small businesses time and money.
These measures include an ATO lodgement amnesty for SMEs who declare COVID-era tax debts, an independent review for small businesses in dispute with the ATO, and an expansion of access to advice through the tax clinic program.
Along with its plans for SMEs – and excitingly for aspiring Atlassian, Canva and Culture Amps – the government also unveiled a surprise new $392 million Industry Growth Program to provide grants to startups to help them commercialise their big ideas and generate traction. The idea is that this funding will help emerging businesses become the big employers of the future.
So as well as delivering the historic surplus, the Albanese government’s 2023-24 budget shows that it – finally – recognises how vital small businesses and startups are to Australia’s economy.
It will help exhausted, extremely under-pressure SMEs manage inflationary, energy and cash flow pressures, and support them in their dealings with the ATO. While the new spending is a drop in the ocean amongst the government’s projected $682 billion expenditure in 2023-24, it at least shows the Albanese government is listening to the small business community.
To see SmartCompany‘s full budget coverage, click here.
