The 2022-2023 federal budget is now just a week away, and Treasurer Jim Chalmers has had ample time to set expectations. Macroeconomic gloom and continued uncertainty mean the Labor government’s first ‘full’ budget since taking power last year will not be a fiscal free-for-all. Hard choices will be made. And small businesses might not get everything they hope for.
We have already taken some headline commitments on board: Chalmers and Small Business Minister Julie Collins this week announced tax breaks of up to $20,000 for small businesses that invest in energy-efficient technology, a policy expected to cost $314 million against the forward estimates for the next four years.
On the topic of soaring energy prices, targeted energy bill relief for small businesses and households is on the cards.
Yet rumblings from across a wide array of portfolios suggest this year’s budget could significantly affect small businesses, even if indirectly.
Here is a short list of potential options the federal government could explore in its financial roadmap, which could flow through to the SME sector.
As the federal government pursues its forward-looking cybersecurity strategy, small businesses will need to upgrade and retool their processes, both to shield themselves against hackers and comply with new regulations.
The exact shape of Australia’s new cyber security strategy is yet to be determined, with lawmakers poring over the findings of the Attorney-General’s review of the Privacy Act and its 116 recommendations to future-proof the legislation.
Even at this stage, two points are clear: small businesses should not be shielded from the penalties loaded onto larger companies that breach their data protection duties, and SMEs should be supported to ensure they can adequately protect user data.
“To support small businesses to comply with the Act, there would need to be a comprehensive package of assistance developed and implemented,” the report says.
As such, further funding to bolster SME cyber protections is a live possibility for the budget.
Prior initiatives, like $18.6 million in funding for another round of Digital Solutions — Australian Small Business Advisory Services grant funding, show how the Albanese government could assist SMEs in that quest.
The buzz around artificial intelligence is deafening, with hype permeating through Australia’s small business space.
Recent research from LinkedIn suggests most SMEs are investing in marketing technology, with 32% of those interested in AI integrations or ChatGPT plug-ins.
However, connecting Australia’s small businesses to the real, long-lasting benefits of AI-enabled technology will take time and effort.
Speaking to SmartCompany in March, Minister for Science and Industry Ed Husic described a “pressing” need to educate Australian businesses about the potential productivity gains posed by AI.
While conversational mimicry and image creation have captured the public’s attention, local SMEs are yet to harness the gritty, number-crunching power of AI at scale.
Lawmakers are now considering how to effectively connect AI providers and everyday businesses, in a bid to kick start Australia’s sluggish productivity growth.
“There is a body of work that has to be done in this field… We’re going to have to have a collaborative way in which we develop those mechanisms that will help meet that [need],” Husic said.
Funding for new AI-focused initiatives is not out of the question in the federal budget.
One potential avenue would be the re-allocation of $124 million in funding contained in the former Morrison government’s 2021-2022 federal budget.
It earmarked millions in grants, but that funding is yet to reach industry players.
Since taking on the job, Assistant Minister for Competition, Charities and Treasury Andrew Leigh has championed initiatives designed to level the playing field between major corporates and smaller entities.
Most recently, that took the form of railing against unfair trading practices, and a stab against “dark patterns” used by digital platforms to manipulate search engine results against small traders.
Speaking to SmartCompany last month, Leigh was reticent to confirm funding specifically empowering the Australian Competition and Consumer Commission (ACCC) to take on those new challenges.
“But what I can say is the budget has been framed framed with an eye to maximising productivity growth and economic dynamism,” he said.
“My colleagues are strongly apprised of the need to get more competition into the Australian economy, and the need to ensure that small businesses have an opportunity to grow and thrive.”
Granted, an unfair trading practices ban would require a legislative fix before the ACCC could step in, but it will be interesting to see if financial measures in the 2023-2023 federal budget match the fervour of Australia’s competition minister.
The last budget committed $76.4 million over four years from 2022-2023 to achieve outcomes from the Jobs and Skills Summit, with the bulk of that funding going towards the Department of Home Affairs as it ramps up visa processing capacity.
More recently, Home Affairs Minister Clare O’Neil has signalled a turn away from skills lists that left small businesses with “Buckley’s chance” of obtaining the personnel they need, when they need them.
Given the major changes to Australia’s skilled migration system forecast by O’Neil, budget-watchers ought to keep an eye on funding for the Department of Home Affairs as it attempts to streamline the skilled migration system for small businesses.
Payment times go hand-in-hand with the federal government’s push to entrench e-invoicing as the go-to way for businesses to send, receive, and pay invoices.
Under the Morrison government, the 2021-2022 federal budget included more than $15 million in funds to promote the scheme. While a similar sum appears unlikely to return this year, extra funding to drive uptake among SMEs would not come as a total surprise.
Given the tumultuous economic environment, small businesses can reasonably expect specialised mental health and debt counselling resources to stick around.
In last October’s federal budget, $10.9 million was channelled towards the NewAccess for Small Business Owners mental health service, and $4 million to the Small Business Debt Helpline, with funding set to stretch to December 2024.
The federal government projected NewAccess would assist 4,700 small business owners in 2022 alone.
The 2023-2024 federal budget will arrive three weeks before the tabling of a major Parliamentary report on the state of Australia’s insolvency laws.
While it’s never something a small business owner wants to think about, insolvency professionals argue the system is too onerous and complex to effectively navigate, making it harder and costlier for businesses and their creditors to wind down.
That goes doubly for the simplified small business restructuring scheme, an initiative intended to streamline the process, but which industry leaders say is too clunky to use.
Early signs suggest lawmakers are sympathetic to those claims.
Given the dramatic uptick in business insolvencies in recent months, a government awareness or education campaign around the simplified scheme is not out of the question — if the eventual report does not call for a top-to-bottom rewrite of insolvency laws, as advocated by leading industry groups.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
