With Prime Minister Julia Gillard’s minority government less than a day old, business groups and entrepreneurs are already scrambling to figure out how the new political paradigm will benefit them.
While many businesses will rightly be concerned with the inherent instability of a minority government – particularly one where the independents Bob Katter, Andrew Wilkie, Rob Oakeshott and Tony Windsor have promised to scrutinise every piece of legislation that goes through the house – the various deals struck by Labor to secure power should actually prove to be reasonably positive for SMEs.
1. The NBN
Thankfully, the NBN now has the full backing of Labor, the Greens and all of the independents. While there are still some questions about the finances that underpin the project, and whether the Government can properly manage the roll-out, this is vital infrastructure that must be built.
2. Regional investment
The independents have successfully negotiated a big package of goodies for rural and regional areas, including more money for skills, education and health. This influx of new money should create many opportunities for regional SMEs and opportunities for city-based SMEs to expand into country areas.
3. Focus on infrastructure
The independents have managed to snag an extra $1.4 billion for infrastructure for regional Australia, which should create new opportunities for SMEs in areas such as construction, engineering and related trades. As the economy improves and the federal budget gets a bit more firepower, expect to see infrastructure spending increase across the country.
4. Company tax cut
With the backing of the independents and the Greens, the mining tax looks likely to get up, which means Labor will deliver on its promise to cut company tax from 30% to 29%. For companies with less than $2 billion in revenue, this will come in from 2012-13, while other companies get it a year later.
5. Immediate tax write-off for assets up to $5,000
Another mining-tax-related measure for small businesses (under $2 million in sales) to be introduced by Labor is an immediate tax write-off for assets worth up to $5,000. This is up from the current immediate-write-off, which applies to assets worth up to $1,000. This also starts in 2012-13.
6. Simplified depreciation
In addition to the tax write-off, Labor plans for small businesses to be able to allocate all other depreciable assets, (excluding buildings), into a single depreciation pool which can be written off at a rate of 30%.
7. Tax reform debate
Rob Oakeshott has forced Gillard and Treasurer Wayne Swan to agree to hold a tax summit in the next nine months, where the giant Henry Review will be properly debated and examined with a view to setting a further tax reform agenda. Really, this is an admission that Kevin Rudd and Swan did an absolutely terrible job with their initial response to the Henry Review, but the new tax summit is welcome nonetheless.
8. R&D tax credit
Labor is likely to try and get its R&D tax credit policy – first proposed way back in May 2009 – through the parliament early in its new government. While the proposal has attracted sharp criticism from industry groups, Industry Minister Kim Carr insists it will benefit SMEs. Hopefully with a bit more tweaking, everyone will eventually be happy.
9. Skills investment
Labor went to the election with an impressive package of skills initiatives, centred around increasing apprentice numbers and assisting students make the jump from school to a trade. Given the looming skills shortage, this investment will be crucial.
10. Climate change
It became clear during the election campaign that many entrepreneurs want to see the issue of climate change tackled, and the Greens are well placed to force action. Entrepreneurs should watch this closely – countless opportunities will emerge from a green revolution.
1. Industrial relations
The Fair Work and Modern Awards regime remains a big problem for many employers. Don’t expect things to improve.
2. Small business representation
Labor strangely would not even match the Coalition’s promise to put the small business minister in Cabinet and getting attention for small business on the political stage looks like it will not get easier.
3. The Greens
With the balance of power in the Senate and a lower house MP, the Greens have emerged in a powerful position and will particularly drive climate change policy. However, the fact that the party’s view of economic and business policy is somewhere to the left of labour (salary caps, higher taxes for the rich, rules to make businesses employ casuals as permanent staff after three months) is a concern.
4. Access to finance
Labor’s Small Business Minister Craig Emerson has consistently downplayed the issue of SME access to finance. Don’t expect this to change.
5. Another election
If this minority government crumbles – and there are clearly no guarantees – then it’s back to the polls.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
