Budget 2024: Raise instant asset write-off threshold to $150,000 say industry leaders

In the lead-up to the federal budget, elements of the government’s Made in Australia program are being revealed.

So far, the package includes domestic manufacturing capability, national reconstruction, quantum computing, and $1 billion of subsidies for an Australian Solar SunShot program.

Meanwhile, the Treasurer is walking an even finer line in the federal budget as inflation remains stubbornly sticky and more Australians call for fiscal restraint to avoid further interest rate rises.

So what if there was a way to reduce the cost of living, promote competition, and create Australian jobs without subsidies and taxpayer loans?

The answer is obvious, and all around us.

Small businesses make up 98% of all Australian firms, employ 5 million people, train 40% of apprentices and trainees, and drive new entrants in the economy.

About 81% of all Australian small businesses are innovating businesses that drive new ideas, enterprises and business models.

Small businesses are enduring a perfect storm of rising energy, rent, insurance, labour and borrowing costs.

In fact, 43% of Australia’s 2.5 million small businesses are not breaking even.

Notwithstanding, the NSW Small Business Commissioner recently found that the cost of red tape registered the highest uptick in concern amongst small businesses in NSW.

The trend of governments making it harder not easier to do business in a challenging economic backdrop must be rectified.

Here are three measures that don’t need to cost the taxpayer.

Firstly, the government must undertake proper small business impact statements before it pursues new rules and regulations. Too often small businesses are given no thought or at best are an afterthought.

For example, in the latest tranche of industrial relations changes that affect casuals and contractors – key segments of the small business workforce – the government assumed a small business would take just 15 minutes to read, interpret and apply new changes to employment classifications.

This was simply devoid from the reality where small owners are themselves the head of operations, legal, marketing and HR (to name a few).

Small business commissioners and the Australian Small Business and Family Enterprise Ombudsman must be involved sooner rather than later in the policy development process.

It makes sense to apply the tailor’s logic of ‘measure twice, cut once’ before new 800-page rulebooks are made law.

If this exercise is done properly, many regulators may think twice before pursuing whole-of-economy changes that impact mum-and-dad operators more than anyone.

For example, how many consumers are aware they will be paying more for their seafood basket takeaway from January 1, 2025, because small businesses must continuously update their menu to reflect the sourcing of each particular seafood item?

This might make business sense for luxury dining venues but will only lead to foregone time and money for family-run fish and chip shops.

Secondly, regulators must provide better concierge services for small businesses.

Agencies must prioritise small business codes and guidance materials that unwind complexity and provide ease of use. ‘How do I simply comply?’ is a common refrain from small businesses navigating a complex landscape.

The focus must be on a ‘policy triangle’ with awareness and education setting a wide base, compliance in the middle, and enforcement topping out the apex.

Small business exemptions need to be provided particularly when the target of so much legislation is not the corner store cafe but a multinational conglomerate.

Small businesses possess unique and lived experience on the impact of changes to the cash rate: so why not appoint a small business representative to the Reserve Bank Board?

Lastly, the government must provide certainty to small business incentives such as the Instant Asset Write-Off (IAWO) and the energy efficiency scheme.

These programs promote private investment through accelerated depreciation, and the equipment is always paid for by the business, not the taxpayer.

Remarkably, the legislation for these programs has still not been passed despite the programs due to expire on June 30, 2024. It’s a bit like calling last drinks before the bar even opened.

CAFBA and COSBOA have jointly been calling for the program to be given funding certainty and for the threshold to be extended to $150,000.

In a challenging economic environment, the government must provide greater incentives for small businesses to invest and employ.

Failure to provide ongoing budget certainty for the IAWO program would be the definition of a missed opportunity.

Predictably, much of the budget week reporting will focus on ‘winners and losers’ and a line-by-line-item analysis by commentators.

But to truly support small businesses in 2024 and beyond, we need to see a system change that creates better regulation and reduced complexity.

Without this, most of the federal budget ‘announceables’ will be in vain.

Small businesses do not expect multi-million dollar interest-free loans on their doorstep, but they do require simpler and fairer rules that allow them to get on with their operations.

Luke Achterstraat is the CEO of COSBOA and David Gandolfo is the chair of advocacy at CAFBA.

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