Budget 2022: Ten key policies in the budget for small businesses — and five things that are missing

Tuesday’s federal budget has revealed a tranche of measures affecting the small business community, but the hard reality of Australia’s economic position means some highly-touted policy ideas have gone unfunded.

The budget deficit is now forecast to sit at $36.9 billion for the 2022-2023 financial year, a bottom line improvement of $41.1 billion. That uptick is largely due to sky-high resource prices and healthy tax receipts, the product of low unemployment. And gross domestic product for the year is projected to hit 3.25%, a slight improvement on the Treasury’s June prediction of 3% growth.

However, that near-term view is clouded by future hardship. In 2023-2024, GDP is forecast to slump to 1.5%. Inflation, set to peak in the December quarter of 2022 at 7.75%, is expected to dissipate over two years. Real wage growth isn’t expected to surpass inflation until next financial year.

Labor’s “responsible” cost of living relief for small businesses and households is bounded by concerns that major stimulatory expenditure, like the measures seen in recent budgets, could actually stoke consumer demand and push inflation even higher. 

However, for small businesses, clear-cut cost of living support in this budget is harder to pin down. 

Looking past the one mention of small businesses in Treasurer Jim Chalmer’s budget address, here are the measures that did make the cut, and how they could affect Australia’s SME community:

1. A $4.7 billion investment in childcare and early childhood education subsidies will see families earning less than $530,000 a year eligible for subsidies of up to 90%. The punishing cost of childcare is known to disincentivise parents, particularly women, from re-entering the workforce. Budget papers state the measure could boost the hours worked by women with young children by some 1.4 million hours a week in 2023-24. Beyond the benefits to families, businesses struggling with the skills shortage are set to benefit from a policy making it easier for new parents to balance their personal lives and professional goals.
2. The government’s focus on skills doesn’t end there. Aged and veteran pensioners are also discouraged from re-entering the workforce, as each dollar of income earned brings them closer to lower pension payments. A new plan will see the threshold boosted by $4,000, encouraging those with decades of experience to work, should they choose.
3. And beyond its long-awaited $1.4 billion boost for Commonwealth-supported university places and the provision of free TAFE courses, budget papers reveal plans for $10,000 wage subsidies targeted towards apprentices in renewable-focused fields. 
4. On the green energy note: good news for small and medium-sized businesses planning to upgrade their energy efficiency. A fresh grant program will soon offer a cumulative $62.6 million in funding to projects designed to boost energy efficiency, lower emissions, or smooth out power demand.
5. Fresh funding for the Australian Taxation Office will help it target businesses operating in the ‘shadow economy’. In other words: businesses skirting the boundaries of tax compliance, or flouting them entirely, should be prepared for another three years of scrutiny.
6. As the government pushes towards its expansion of enterprise bargaining rules, the Fair Work Commission will move to support small businesses as they engage with the system. The projected cost: $7.9 million over four years from 2022-2023, flowing towards small businesses often locked out of the enterprise bargaining system through cost and complexity.
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7. The Fair Work Ombudsman and the Department of Employment and Workplace Relations will receive $3.4 million from 2022-2023 to assist small businesses as they react to the government’s plan to legislate ten days of paid family domestic violence leave. The funding will go towards “education, technical advice and support services” for those businesses, budget papers state.
8. As previously announced, small business owners will receive tailored mental health support and debt counselling services to the tune of $15.1 million. New in Tuesday’s document: confirmation the measure will be partially funded by the redirection of money apportioned to the Australian Small and Family Business Ombudsman in the Coalition’s March budget.
9. Labor has dumped a Coalition plan to allow the owners of intangible assets to self-assess their effective life for depreciation purposes. The move is slated to boost the government’s bottom line by $550 million over 4 years from 2022-2023.
10. A slew of state and territory business grants, delivered through the earliest years of the COVID-19 pandemic, are now classified as “non-assessable, non-exempt” for income tax purposes. That tax treatment, provided only in “exceptional” circumstances, is projected to result in an “unquantifiable decrease in receipts” in the four years from 2022-2023. In practical terms, this means grant payments which would usually be assessed under personal income will fall outside of the ATO’s purview. 

And measures the budget didn’t include:

1. Small business groups, including the Council of Small Business Organisations Australia, had called on the federal government to fund its Cyber Wardens initiative: a training program designed to boost SME resiliency against digital attacks. With the Optus and Medibank data breaches fresh in Australia’s memory, and Minister for Cyber Security Clare O’Neil forecasting amendments to privacy legislation, support funding for the SME community was certainly a possibility. However, no funding for Cyber Wardens or similar measures exists in the papers.
2. Temporary full expensing won’t be extended past 2023. The measure, hailed by business groups as a investment-spurring saviour for SMEs, faced lower-than-expected takeup: big businesses may have opted out in favour of traditional depreciation calculating methods, budget papers state, while small businesses may not have taken advantage out of fears their new investments would not arrive in time to take advantage of the policy. All told, businesses with turnover under $50 million are estimated to have claimed temporary full expensing for approximately $61 billion in assets. 
3. Accounting groups, including CPA Australia, had called on the federal government to extend vouchers to small businesses hoping to access professional advice. Such measures would have granted easier access to financial, operational and strategic advice, CPA Australia argued. Those groups had no such luck in the federal budget.
4. The controversial Stage 3 tax cuts remain in the books, despite calls for Chalmers to axe measures projected to cost the government $254 billion over ten years.
5. Other significant tax reforms were absent in the budget papers, despite calls for holistic change from the business sector.