From direct energy bill assistance to a revitalised instant asset write-off scheme, the new 2023-2024 federal budget introduces more policies tailored to small businesses than the Albanese government’s October budget.
SmartCompany discussed these policies and more with Small Business Minister Julie Collins in her first SME-focused interview since budget night.
In a wide-ranging chat, Collins outlined how the government balanced spending needs against inflationary pressures, highlighted support services for struggling enterprises, and outlined a shake-up to multi-million dollar entrepreneurship schemes.
Discussing the elevation of small business issues in the budget compared to October, Collins said inflationary woes aren’t exclusive to households.
“We know that inflation is impacting households and small businesses particularly, and what we wanted to do with this budget was to support small businesses but at the same time, do it in a way that we didn’t add to inflation,” she said.
However, efforts to support small business expenditure are meshed with that inflation-busting pledge. Collins said the new pledges take those broader economic concerns into account.
The “most obvious” intervention is in Labor’s energy relief package, Collins said.
Bill rebates for SMEs, slated to provide $650 in direct support in some jurisdictions, are balanced by last year’s direct intervention “putting downward pressure on energy prices,” she said.
The $20,000 ‘bonus’ tax deduction for small businesses undertaking energy-efficient upgrades falls under the same banner, she suggested, even though the measure is intended to bolster (greener) spending among SMEs.
“We also had that small and medium size energy grant program that was in the last budget, and that really heavily subscribed so we thought, ‘What what else can we do? We can also do this additional deductibility for people,” she continued.
Another key spending measure — the revamped $20,000 instant asset write-off scheme — toes the same line, she said.
It will compromise between the extremely generous temporary full expensing scheme, which is set to expire on June 30 this year, and what some industry groups fear would have been the reversion to $1,000 in instant asset write-off thresholds.
“We’ve obviously been talking to small businesses and some of their peak bodies in the lead-up to the budget process,” Collins said.
“And a lot of them were saying to us that there are also issues around supply chains,” she said, reflecting on concerns upgrades ordered today but delivered months into the future would exclude small businesses from generous tax conditions.
“And we knew that some of them were considering upgrading small plants, equipment and things that they needed to do.
“So we want to be able to continue to support them in a way that didn’t add to inflation.”
The federal budget contains a number of policies intended to smooth the often tenuous relationship between small businesses and the Australian Taxation Office, which counts some $30 billion in collectable debt among SMEs.
An amnesty on late payment penalties, funding for tax education clinics, and a temporary halving of the formula determining the increase of PAYG and GST instalment payments are all on the agenda.
When asked how the budget balances the needs of the ATO against the struggles of small business, Collins said it’s all about the tax office providing “support”.
“What we wanted to do was make sure that the ATO has the resources it needs to support small businesses earlier, if they have issues or if they think they’re going to have issues in the future, to try and support them in a way that’s practical, and provide that early advice to them,” she said.
“So it will save them time and money, but also make sure that they’re more sustainable in the long-term.
“And what we want to do is make sure that small businesses get, you know, if they put up their hand and say ‘We have an issue’, the earlier they do that, that we’re providing them with the means and the support to deal with the ATO appropriately for the ATO to deal with them appropriately.”
“I think everybody accepts that, you know, in Australia, we need everybody to pay their fair share of taxes, and the returns that we get for that and what we get for it, we get things like cheaper childcare, which means workers can do more hours, we get things like fee-free TAFE, which means that we have more skilled workers,” Collins added.
“I think everybody accepts that that’s the way that works.
“If there’s any really practical ways that we can continue to support small business in terms of you know, making their life easier and simpler as they deal with government agencies, we’re happy to always look at that.”
The budget contains no reference to rising small business insolvencies, or the simplified small business restructuring program, which insolvency experts say is hampered by stale and outdated legislation.
Reflecting on those matters, Collins again said its best that small businesses reach out before crisis point, either to the ATO, the Australian Small Business and Family Enterprise Ombudsman, or other support services.
To bolster Australia’s productivity, the budget includes the $392.4 million Industry Growth Program, pledging grants and financial support to small businesses and startups striving to commercialise innovative ideas.
Funding for the Entrepreneurs Program has been reframed within the industry growth package, Collins added, a move endorsed by the Council of Small Business Organisations Australia (COSBOA).
Funding for existing contracts under the Entrepreneurs Program remains in place.
“We do want to make sure that we are supporting small businesses and this is the best utilisation of the funds available,” Collins said.
What else small businesses can expect is yet to be determined, with the program, contained within the portfolio of Minister for Industry and Science Ed Husic, still some way from implementation.
Somewhat clearer is the Albanese government’s plan to cull places from the separate Self-Employment Assistance Small Business Coaching program, a move set to save $111.6 million, and scrap the $22.8 million Entrepreneurship Facilitators Program.
Funding from both programs, contained within the Department of Employment and Workplace Relations portfolio, will be redirected to other policy priorities.
As digital threats mount against Australian businesses, the federal budget’s inclusion of $23.4 million in funding for COSBOA’s Cyber Wardens program represents one of the government’s most significant efforts to protect SMEs to date.
Notably, with Australia’s broader cyber security strategy still under development, Collins said the funding will go towards a “pilot” to “see whether or not and how it works.”
The language is notable, as budget papers alone suggest a longer-term commitment to the scheme.
“It’s about making sure that we see whether this works in terms of providing that support to small businesses to make them more resilient and to try and increase their resilience in terms of cyber attacks,” Collins said.
Certainly, the budget offers more to small businesses than many observers had expected. The same goes for the surprise, if slim, budget surplus delivered by the Albanese government.
“You know, this is a very big turnaround in the federal budget that we have been able to craft, and I would say to small businesses that we’re doing everything we can to make life easier for them,” Collins said.
“And we understand the critical role that they play in our economy.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
