“D for dull”: Small business groups lament lack of support and tax reform in budget

The 2024-25 federal budget has left the small business community underwhelmed and disappointed, with some in the sector going as far as handing the Labor government’s third budget a “D for dull”.

While key advocacy groups welcomed the extension of existing measures, including the $20,000 instant asset write-off and energy bill relief, the Council of Small Business Organisations Australia (COSBOA) called these temporary measures “necessary but not sufficient to truly address the issues currently facing small business”.

While COSBOA acknowledged the government’s “commitment to develop a future cutting-edge, AI-embraced, simpler business environment”, it used a budget night statement to declare “small business has been left behind in the government’s strategy of picking winners and providing subsidies to selected industries”.

“Small businesses face a complex operating environment, and this budget provides little for a current source of optimism,” the group added.

The absence of broader tax reform in the budget is also among the key concerns.

Scott Treatt, CEO of The Tax Institute welcomed the overhauled Stage 3 tax cuts and “the relief … [they] will bring to Australian bank accounts come 1 July” but did not hold back by calling them a “temporary bandage on a broken system”.

The Australian Taxation Office (ATO) received a $187 million funding boost in the budget to combat tax and superannuation fraud, and a number of its compliance taskforces received ongoing funding.

However, Treatt said the Institute has long held the position that governments should not over-rely on temporary taskforces to address tax compliance.

“Instead, we call for better base funding for resources which will be able to provide the right level of advice and guidance to support all taxpayers,” he added.

Mid-market accounting firm Pitcher Partners was the one to give the budget the “dull” label for its inability to “inspire business confidence”.

“Not even the government expects this to be inspiring for business and there was little to spark joy after a series of pedestrian announcements,” commented Mark Harrison, a partner at Pitcher Partners Melbourne.

“The only positive for business lies in the forecast reduction of inflation but really it’s a case of another year, another set of missed opportunities for business investment or visionary government policy to transition the Australian economy.”

Harrison also highlighted that even though the government intends to extend the $20,000 instant asset write-off for another 12 months, it has yet to pass legislation for last year’s extension with six weeks until the end of the current financial year.

“It won’t get the business investment engines revving,” he added.

Likewise, CPA Australia observed this year’s budget was “no shot in the arm for small business”, with the $325 in energy bill relief unlikely to provide much help to industry operators, said the group.

“Small businesses – most of which already have very thin margins – desperately needed a budget that would help alleviate the cost pressures they are facing on a daily basis,” said CEO Chris Freeland.

“While the emphasis on relieving pressures on household finances was expected, a more business-centric budget would benefit all Australians as small businesses are significant contributors to the economy and job creation.”

Some “targeted” measures will help SMEs

The sector said ongoing funding for the NewAccess for Small Business Owners and the Small Business Debt Hotline are among the “targeted” budget measures that will help many small business owners.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson, whose office received separate funding to expand its dispute resolution services, said this two-year funding is “particularly important”.

“We have seen a 20% increase in calls to our helplines over the past year from small businesses struggling to manage their debts,” he said in a statement on budget night.

“It is vitally important that small business owners take time to focus on their own mental and financial wellbeing and these free services are provided by people who understand the realities of running your own business and can offer practical help.”

Nevertheless, Billson said budget forecasts of weaker overall growth will add to the current burden on small businesses.

“We need to shift the mindset from minimising headwinds to maximising the ‘wind in the sails’ of our hard-working small and family businesses,” he said.

“Some 43% of small businesses were not profitable in the last full tax year. Three-quarters of self-employed people, for whom their business is their full-time livelihood, take home less than average total weekly earnings.

“It is often said that small business is the engine room of the economy. We must ensure that small and family businesses can fire on all cylinders – not have a cylinder taken out.”

Business management platform MYOB picked out the additional funding to improve small business payment times as one of the key budget measures that will help the sector, as “under these economic conditions, businesses getting paid on time is vital”, while Xero said it would have liked to have seen more in the budget to “drive productivity” among small businesses.

The importance of productivity was also highlighted by Master Builders CEO Denita Wawn, who while acknowledging the seemingly holistic approach the government is taking to addressing the housing crisis, said the budget offered support to workers “but very little for the businesses who are struggling to keep those very workers employed”.

“It’s accepted across the board that business, including small business, is leaned on to spearhead economic recovery, but there have been minimal measures in the budget to boost business productivity,” she added.

To see SmartCompany‘s full budget coverage, click here.

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