Budget 2023: Startup founders call for tax breaks and sustainability pledges

The Labor government will be handing down its 2023 budget next week, and we’re already getting an influx of predictions and hopes for what we’ll see from Jim Chalmers come Tuesday night. When it comes to the startup community, there’s a lot of similar themes to last year.

While there has, once again, been warnings about a conservative budget to match the current economic climate, there’s still plenty of opinions floating about.

We spoke to some Australian startup founders about their priorities for the budget, and saw some familiar themes — tax cuts, support for women and a focus on sustainability — with a few added extras.

Tax Breaks, grants and funding

Brodie Haupt, CEO and co-founder of WLTH: 

“The potential $20,000 incentive for small businesses (up to $50 million turnover) that invest in energy-efficient equipment is a great opportunity to reward businesses investing in sustainable practices, whilst encouraging others to consider their environmental footprint without compromising the bottom line.

“The government may also extend the productivity measure that allows businesses to fully expense the cost of depreciable assets in the first year of use, as this is set to expire on June 30 this year. That said, they may discard it altogether due to inflationary pressures. The big issue the government faces is the cost of living and the implications this has on individuals and businesses alike. As SMEs are most of our country’s makeup, they’re walking a tightrope between easing pressure without increasing inflation.”

Ben Pfisterer, CEO and co-founder of Zeller

“Recent research conducted by Zeller shows that 74% of business owners surveyed are more concerned about the costs of running their business than they were twelve months ago.

“In the 2022 budget, businesses with an annual turnover of less than $50 million were given access to a 20% tax deduction for the cost of expenses and depreciating assets related to business technology, including payments hardware like Zeller Terminal, cyber security systems, or subscriptions to cloud-based services. Extending this program encourages more business owners to invest in better technology — improving efficiency and giving them more time to spend in other areas of their business.

“Other incentives that can be provided include small business grants, an extension of the small business skills and training boost to improve access to training courses, and an extension of the instant asset write-off scheme to assist businesses in funding purchases to invest in their growth.

“It is crucial for the government to continue supporting small business owners by providing them with the necessary tools to thrive in a tough environment. By doing so, we can help these businesses to grow, create jobs, and contribute to the broader economy.”

Andy Miller, CEO and co-founder of Heaps Normal:

“It’s been an encouraging sign of the Labor government’s commitment to arts and culture that they announced a $200m funding boost for arts and culture earlier this year. We hope these sectors, which are home to so many operators and individuals who have existed on a financial knife’s edge for years now, continue to receive financial support at this budget — in order for them to continue creating and sharing work that not only adds to Australia’s GDP, but that also inspires us, helps us connect and drives change.”

Tony Yammine, CEO and co-founder of Avarni:

“Early-stage companies are usually never far from exhausting their funds — a fact that underpins the high-risk, high-return venture capital investment model. The Budget should look to begin providing concessional debt, especially to emerging climate tech start-ups which are actively contributing to Australia’s decarbonisation and clean energy goals.

“We also need government funding to ensure startups and scaleups have the capital required for expansion, office spaces, R&D, to secure procurement contracts, all the way through to the later stages of company growth and development. Startups in Australia are more averse to dilutive financing than their American counterparts, making it more important for government programs to provide additional avenues for success beyond equity.

“We’ve watched first-hand how successful government programs can assist further in early-stage funding, from Green Innoboost in Morocco and India’s Seed Support System. We need to take cues from our international partners and shift our view that startups are risky beneficiaries of capital and instead embrace the opportunities in front of us by giving tech startups the runway to move forward.”

Michael Tutek, CEO and co-founder of preezie:

“Existing programs such as LaunchVic’s 30×30 scaleup program provide valuable support for startups, but programs like these are usually state government-run. In order to further empower Australian startups, the Federal Government should consider offering more comprehensive support across the country. While R&D tax incentives are essential for innovation, businesses could benefit from similar grants aimed at sales and marketing efforts. By subsidising expenses related to launching and promoting novel products, the government could help bolster the chance of success across local enterprises.

“One of the ongoing concerns in the post-COVID era is the slow ‘return to office’ in central business districts. Providing businesses with greater access to shared office spaces and facilities could help alleviate this issue and support the revival of urban areas and local businesses such as cafés and restaurants.

“As businesses look to expand and establish a global presence, the Federal Government could offer assistance in opening offices overseas, such as in the United States. This support can help Australian businesses thrive in the global market and pave the way for further growth. Encouraging collaboration between established businesses and startups can be a major driver for innovation. The Federal Government should consider offering incentives such as funding collaborative programs or providing tax concessions to foster these partnerships and support Australian startups.”

Sustainability

Katherine McConnell, founder and CEO of Brighte:

“With energy costs rising, states should receive Budget allocations for zero-interest loans and rebates for household electrification and energy efficiency. This would alleviate financial strain on families, create green jobs, and foster the growth of cleantech startups.

“As a woman-led scaleup, we urge the Government to use the Budget to demonstrate its commitment to supporting women in STEM, entrepreneurship, and clean energy trades, particularly those seeking to transition back to work or switch careers.”

Luke Fossett, general manager of GoCardless 

“Many SMEs are struggling in the current cost of living crisis, the Federal Budget should also lend greater assistance to businesses looking to modernise, innovate or survive. For example, the last budget’s $62.6 million grant funding for SMEs looking to improve energy efficiency was a great incentive but more could be done. GoCardless is a business focused on reducing strain on small and medium enterprises so anything in the budget that helps businesses to take greater control of their finances would be a net positive.”

Tony Yammine, co-founder and CEO of Avarni:

“Australian climate-tech startup founders are keen to see initiatives in the upcoming Federal Budget that drive innovation and creative ideas across the sector, specifically aligned with the government’s previous commitment to a 43% emissions reduction target by 2030 and net zero by 2050.”

Cybersecurity and agtech

 Anthony Spiteri, regional CTO APJ of Veeam

“The backbone of every organisation’s IT and business operations is its digital infrastructure, and this is also at the heart of innovative transformation efforts. Digital infrastructure arms each and every business with the tools to better navigate market conditions that are in a constant state of flux, thus providing the edge businesses need to capitalise on market opportunities and stay ahead of the competition.

“But having strong digital infrastructure also comes with the need to maintain it, which means cybersecurity and data protection measures are just as important to implement. Data is critical to keeping businesses running and businesses simply cannot afford any extended downtime, especially in today’s market conditions. Reliable ransomware protection and recovery ensures the resilience of your digital infrastructure is guaranteed.

Treasurer Jim Chalmers has already said next week’s budget will be ‘handed down in the context of an uncertain and volatile global economy which is precariously placed’. By doubling down on key fundamentals like digital infrastructure, cybersecurity and data protection, businesses are likely to be more resilient in the face of the overall slowdown in economic growth throughout 2023.”

Remo Carbone, CEO of MEQ Probe

“The agriculture industry is a vital contributor to our economy, employing hundreds of thousands of Australians. However, it is vulnerable to a range of risks, including drought, climate variability, biosecurity, global competition, and the recent cost of living crisis.

As an agtech startup pioneering cutting-edge technology for the red meat sector, MEQ is calling for significant funding for research and development in agriculture, or tax incentives to promote innovation that can help producers and processors boost productivity and sustainability.

Australia also has enormous potential as a hardware manufacturing powerhouse. Experts predict that reinvesting in this sector could lead to a 50% growth in the economy, creating jobs and driving innovation. To achieve this goal, Australia needs to support early-stage hardware companies, helping them access the capital and expertise required to succeed.

Ideally, the budget should allocate funding or resources to support startups looking to bring manufacturing back to Australian shores, thereby strengthening our economy. By investing in this way, the government could position Australia as a leader in building hardware that is ready for the information age.”