Fran Bailey, Minister for Small business and Tourism: “It’s a humdinger of a budget for small business. I have a smile from ear to ear. The budget and the industry statement addresses a lot of issues that have been niggling small business.”
Peter Hendy, president of ACCI: “It’s the education budget that business was looking for. We put out a blueprint calling for an extra $2.6 billion over three years and they’ve more than matched it and included important structural reforms with respect to universities and vocational education and training.
“There are some tax changes that will be helpful for small business. On GST they’ve raised the registration threshold, which will be welcome; the education and training announcement will be good for all business but especially small businesses that are suffering with skills shortages.
“On tax, we would have gone further. We still think the Government should have a policy of reducing the top rate of tax over a number of years. We say there is further room for significant tax cuts there.”
Peter Moltoni, president of the Tax Institute of Australia: “The Government has only been selective about reducing the complexity of our tax laws.
“It is clear small business is likely to suffer in the future, as the 2007-08 budget will deliver increased compliance costs coupled with a lack of qualified accountants…
“Additionally, the use of offsets for delivering tax cuts further entrenches the complexity in the system, thereby making future tax rate simplification more problematic.”
Tony Steven, chief executive of COSBOA: “We welcome budget measures to raise the GST threshold for 160,000 micro businesses who will now be falling underneath the voluntary $75,000 turnover threshold. The announcement that simplified BAS accounting measures will now be available to all small businesses with revenue under $2 million a year is also a good thing.
“There were a couple of things we were hoping for that weren’t in there. I haven’t seen anything about adjustments to fringe benefits tax, which is what we were asking for; extra export assistance for small businesses also should have been there.”
“Also, the tax office will provide case managers for small business, at a cost of $40 million, to help business owners and managers with the complex processes when dealing with tax issues. This is especially important when you take into account the size of small business debt to the tax office currently.”
Kevin McDonald, chief executive of the NSW Business Chamber: “This is a budget that should create a platform of growth for Australia… Changed compliance initiatives for SMEs in relation to GST and PAYG are welcome, as is the $40 million for the tax office to assist SMEs in establishing their record systems.
“Lifting workforce participation is essential if we are to lift Australia’s economic performance once again. Encouraging and supporting parents to enter and return to the workforce through improved access to child care, providing additional training, lifting skilled migration and providing the right tax incentives to families are all critical in helping increase the pool of workers available to Australian businesses.”
Heather Ridout, chief executive, Australian Industry Group: “The Federal Government has set out to prove the adage that good policy can be good politics by delivering a smart budget that hits the right targets
“The increase in the skilled migration intake will help alleviate skill shortages, which remain a chronic drag on business competitiveness. The initiatives in higher education, vocational education and training and schools will assist in improving the performance of our education system over the medium to longer terms.”
Craig Whatman, GST director, Pitcher Partners: “The GST changes are targeted very squarely at very small businesses aiming to reduce their compliance costs and, by and large, they do achieve that.
“Tax invoices will no longer be required where the GST exclusive value of the acquisition doesn’t exceed $75, currently it’s $50. That really will be a benefit in terms of compliance costs in terms of having to obtain tax invoices for low-value acquisitions.”
OK, budding entrepreneurs. Here are the top 10 business opportunities from the 2007 budget.
1. Get into solar panels. With an $8000 rebate for households, anyone that makes or installs those big sun-soakers will make a motza.
2. How about becoming a home economist, inventing a new yogurt bar or learning to love little children at after-school fitness programs? There is an extra $150 million to improve nutrition and encourage physical activities among school children.
3. Water tanks!!! It won’t be water that Steve Cordell from Azuratec (link) will be drinking post budget. He will be on the hard stuff with the announcement that there will be $201 million over six years for water tanks for schools and community organisations.
4. Start a tutoring school. It’s all the fashion now to give money to parents to pay for tutors, and in this budget there are $700 vouchers for children with literacy and numeracy problems.
5. Forget about getting your toilet fixed anytime soon. Plumbers around the country will switch to training when apprentices turn up to spend their $500 vouchers.
6. Start an outplacement company to deal with accountants displaced by the introduction of simplified online tax returns.
7. Start a building company that specialises in the education sector. Hey, it’s worked for Rino Grollo’s company Equiset. But there’s plenty more money around with the announcement of $5 billion perpetual fund for building and funding universities.
8. How about some new pubs around the Beaconsfield Mine with the news that the Government will provide $25,000 to the Miners’ Support Fund.
9. Fancy running around the outback shouting through a megaphone? Start a tourist program with some of the $34.9 million allocated over four years for grants.
10. Good communication skills? Join the public service or an industry association and assist the government to sell WorkChoices to the nation, with $18.1 million being on offer for the next two years to continue its WorkChoices Employer Adviser Program.
The $31.5 billion personal tax cuts and generous spending on infrastructure will not increase the chance of an interest rate rise in 2007, leading economists say.
ANZ’s head of Australian economics, Tony Pearson, says that at 1% of GDP, the $10.6 billion surplus for 2007-08 delivered by Treasurer Peter Costello is roughly in line with previous budgets.
“I don’t think the budget will alter the Reserve Bank’s view of the economy. It won’t be overly stimulate the economy and we haven’t changed our view that the RBA won’t look at lifting interest rates until early 2008,” Pearson says.
The budget’s $15.8 billion in new spending and tax measures over 2006-07 and 2007-08 amount to about 1.4% of GDP. By way of comparison, in the 2004 budget the package of new measures was also worth 1.4% of GDP over a comparable period.
Measures such as the $5 billion higher education endowment fund help minimise inflationary pressure by deferring the flow of money on to the economy over several years, Pearson says.
But there is no doubt the economy will grow at a healthy clip next financial year, with GDP growth forecast to lift from 2.5% in 2006-07 to 3.75% in 2007-08.
This could prove to be a conservative estimate, says Westpac senior economist Anthony Thompson.
“There could be a rebound from the drought if it rains, a pick-up in exports as capital investment kicks and we think there is an upside in consumer consumption – all that means economic growth is more likely to be something like 4%.”
Smart Company is a sister publication to The Mandarin, catering to Australia’s entrepreneurs, small and medium business owners and business managers.
