Michael Fox is the co-founder of online shoe retailer, Shoes of Prey, which enables consumers to create their own custom shoes.
Wish list
Paid parental leave scheme; no cuts to Commercialisation Australia; no reduction in the research and development tax credit; no cuts to the Export Market Development Grant.
Reality
Fox says the budget is “not a good budget” for the tech startup community.
“Being fiscally responsible is good, but I haven’t quite decided if this budget is the right way to go about it,” Fox says.
For tech startups like Shoes of Prey, Fox says the budget dealt a heavy blow with the axing of two major programs: Commercialisation Australia and the Industry and Innovation fund.
“There are improvements that could be made to those programs, but they didn’t need to be scrapped,” Fox says.
Fox was already worried before the budget about the future of Commercialisation Australia after having spent many hours preparing an application for funding for Shoes of Prey only to be told the program was on hold.
His fears were confirmed in the budget with Commercialisation Australia axed alongside the Industry and Innovation Fund.
“Commercialisation Australia and the Industry and Innovation Fund were both really good programs for helping business in Australia with funding and that’s a big challenge for businesses that are based here,” Fox says.
“One of the downsides of axing those programs is that it removes one of the incentives that startups have for staying in Australia. We will see more tech companies establish an idea here and then move to the US.”
For Shoes of Prey, the abolition of Commercialisation Australia is “frustrating timing” after spending the time preparing a detailed application. “We would have preferred to know that was on the cards,” Fox says.
Shoes of Prey will also be hit by the change to research and development tax credits.
“Because the company tax rate has been reduced they are reducing the difference for the R&D tax credit,” Fox explains.
“It doesn’t matter for profitable companies, but for startups and businesses like ours that are not profitable it’s a slight negative.”
He estimates Shoes of Prey will be $15,000 to $20,000 a year worse off as a result.
On the plus side, Fox is relieved the export development grant survived the budget unscathed.
It’s good that the Export Market Development Grant hasn’t been scrapped… it’s a good program,” he says.
Fox also welcomed confirmation of Abbott’s paid parental leave scheme in the budget.
As a shoe company, 70% of Shoes of Prey’s employees are female so the PPL will ease the burden on them.
“For our female employees that’s good news,” Fox says.
Calder’s business, Bluechip Communications, specialises in public relations for the financial services industry.
Wish list
Affordable child care; certainty and simplicity in financial services reform; no change to the childcare benefit; no cuts to superannuation incentives.
Reality
Calder says the budget was more interesting to her as a communication case study than as a game changer for SMEs.
“There were not a lot of surprises for small business owners,” she says.
“The government executed a well-thought-out and long-range communication strategy aimed at making some tough messages far more acceptable politically and in media. To a large extent it worked.”
Running a business in the finance sector, Calder says she welcomes stability in superannuation and the government’s commitment to reach 12.5% super guarantee.
“Superannuation adequacy remains the biggest financial risk to many Australians,” she says.
“Most people need to save more of their income than the government’s mandated 9% to 12% if they are to enjoy a comfortable retirement.”
Calder says women are particularly at risk of not having enough money when they leave the workforce.
“We’d like to see more effective incentives to increase women’s participation in paid work,” she says.
“For us, this is about access to high quality experienced people, but also about helping ensure women have economic means to look after their families and themselves when national statistics show lower earnings and career breaks work against this.”
Calder cites international experience which suggests paid parental leave can actually work against getting women back into paid work versus measures like access to affordable quality childcare.
“Paid parental leave is a start but perhaps not, on its own, the most effective way to support working parents struggling to balance kids and jobs,” she says.
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
