As small businesses brace against worsening cost pressures, Small Business Minister Julie Collins says the new federal budget is more “focused on long-term resilience” than quick-fix solutions to today’s economic hardship.
Unlike recent Coalition governments, which directed billions of dollars in taxpayer support towards small businesses to keep COVID-19 lockdowns from stalling the economy, the new Labor government debuted its 2022-2023 budget in a period of economic overheating.
The inflation rate now sits at 7.3%, rising 1.3% since the June quarter, with pent-up consumer demand and global supply-side shocks driving up the cost of living.
While surging power costs, the price of raw materials, and lingering skills shortages emerged as immediate concerns for small businesses ahead of the federal budget, the Albanese government indicated further hand-outs could worsen inflation.
The result: a budget more focused on long-term sustainability than directly alleviating today’s sharp cost pressures.
Speaking to SmartCompany, Collins says Labor is aware of the challenges facing today’s small business community.
“I know that deadly flooding, bushfires and the COVID-19 pandemic have hit our small businesses hard,” she said.
“Rising inflation and ongoing staff shortages have only added to the challenges.”
However, key elements of Labor’s small business budget — namely $62.6 million in new energy efficiency grants for small businesses, and $15 million for specialised mental health support and debt counselling — speak to Labor’s interest in the future.
“We are focused on long-term resilience and we have a series of budget measures to assist Australia’s small businesses,” Collins said, including measures that “will be particularly important in the context of the challenges facing small businesses”.
On the skills front, the budget assigns more than $1.4 billion in funding for the expansion of Commonwealth-backed university placements and 465,000 additional fee-free TAFE places, 180,000 of which Labor hopes to deliver in 2023.
A $95.6 million plan to subsidise the wages of apprentices in green energy apprentices is also on the books.
Additionally, $42.2 million over two years will support the Department of Home Affairs as it tackles a backlog of skilled visa applications, and the 2022-2023 upgrade of permanent migrant intake numbers from 160,000 to 195,000.
Although it will take some time for those graduates, apprentices, and skilled migrants to fill the ranks of Australia’s depleted workplaces, Collins says the measures represent some of the “immediate changes our government has taken that will benefit Australia’s small businesses with current pressures”.
Labor’s decision to legislate more than $1.55 billion in technology and skills training tax write-offs put forward by the Coalition government also speaks to Labor’s small business commitment, Collins added.
Labor’s childcare subsidy package and paid parental leave extension plans are also poised to lift workforce participation.
Beyond those budget measures, Collins says the Albanese government’s provision of small business digital training grants, the legislation of Commonwealth procurement rules favouring small businesses, and new unfair contract rules represent its focus on the sector.
“The Albanese government knows small businesses are vital to Australia,” she said.
“They are at the heart of communities across the country, and they will always be at the heart of this government’s decision-making.”
Although the budget features little in the way of direct subsidies for small businesses facing higher prices, the response to Labor’s first budget in a decade has been broadly positive.
The Coalition’s criticism focused on power prices, with Opposition Leader Peter Dutton saying the federal government could effectively ease power price pressures by slowing the transition from coal and gas electricity generation.
However, Dutton confirmed the Coalition’s support for Labor’s planned expansion of the childcare subsidy scheme.
The small business sector has expressed cautious optimism about the budget, and the Council of Small Business Organisations Australia gave the document its blessing with a ‘7/10’ rating.
“This is a relatively positive budget for small business,” CEO Alexi Boyd said.
“However, the implementation needs to include consultation with small business, so we don’t have unintended consequences for the sector that represents 2.4 million businesses and their employees.”
Some small business luminaries did express their concern over the mental health support and debt counselling initiatives, as their funding was partially gained by diverting investment in the Australian Small Business and Family Enterprise Ombudsman.
Despite those misgivings, the sector also has new concerns to contend with: Labor’s planned overhaul of industrial relations regulations, which promises to have an equally profound impact on the sector.
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.
