The budget through a small business lens
On Tuesday 25 October, Treasurer Jim Chalmers delivered what a panel of small business experts has labelled a “cautious”, “line-in-the-sand budget”.
On Tuesday 25 October, Treasurer Jim Chalmers delivered what a panel of small business experts has labelled a “cautious”, “line-in-the-sand budget”.
In a recent webinar, Sam Allert, CEO of Reckon, Matthew Addison, chair of the Council of Small Business Organisations Australia (COSBOA), and Lisa Greig, principal of Perigree Advisors, cut to the chase about how this budget affects SMBs. They also discussed where they thought the government could have done more for small businesses, and what we’re likely to see in the May 2023 budget. Here are some of their key takeaways.
This budget in a nutshell
As the panel acknowledged, the October 2022 budget has come during some very “difficult”, and “interesting” economic times. In other words, it was cautious for a reason — Addison even went so far as to call it “the budget we needed to have”.
There wasn’t a huge focus on SMBs, aside from some funding for mental health support, a $7.9m provision to the Fair Work Commission (“to support the uptake of enterprise bargaining for small businesses”), and new energy efficiency grants.
On the plus side, the government is taking a very consultative approach, the panel said, and the Jobs and Skills Summit should give SMBs more input into the follow-up May 2023 budget.
Watch our webinar: Industry leaders unpack how the federal budget affects your business here.
A bit lax on tax
A survey of Reckon’s small business clients found that tax reform was a top priority, Allert said, and yet 90% “weren’t confident this budget was going to bring enough small business benefits”. They were right: apart from some extra detail around multinational tax avoidance, and some additional funding for the ATO, tax didn’t get much of a mention.
“The commitment to consult with small businesses and genuinely look at reform — brilliant, that’s a start,” Allert said. “But I think we needed more, we needed indication of opportunities for tax benefits and tax savings.”
There was one change. The Labor government has decided not to adopt a coalition policy of allowing self-assessment of the depreciation of intangible assets, such as software, patents and various IP.
“It’s not going to cause too much grief because all it is is just a timing difference and you can still control it,” Greig said of the decision. “But we’re really looking at businesses that are online — anyone that’s in the digital assets, cryptocurrency, blockchain space… they’re the ones that’ll be impacted.”
For anyone wanting updates on temporary full expensing, Greig thinks “we’re going to see that in May”.
More needed on cybersecurity
The Labor government has slightly tweaked the previous budget’s contribution to cybersecurity, allocating $12.6M to combat scams and online fraud. However, Addison thinks more needs to be done to help businesses beef up their cyber defence.
This is symptomatic of a larger issue, according to Allert. “I really think on one hand the government is driving digitisation really well and has for many years,” he said. “They’re just not doing enough to incentivise and support small businesses to adopt that digitisation and really get the benefit from investing in technology and cybersecurity in their firm.”
Greig agrees that SMBs have “got to be incentivised to set their businesses up so they’re ready for the digital revolution.”
A call to cut red tape
Greig was a little concerned about the $1.1bn investment into the Tax Avoidance Task Force, but Addison doesn’t “think they’re going to get pedantic”. It’s more “about finding those high-risk practitioners who are defrauding the system and putting mechanisms in place to get them out”, he said.
On the other hand, “a whopping 86%” of Rekon’s surveyed SMEs said their “number one wishlist thing was cutting compliance,” Allert said. He believes the government has “got to make it as easy as possible and support small businesses by cutting that red tape, not adding extra layers of compliance.”
Addressing the skills gap
As Addison pointed out, this budget “increased migration numbers”, “put more money into visa processing”, and “kept the concession for overseas workers about how many hours they can work”.
There were also apprenticeship schemes and changes to paid parental leave and the pensioner income threshold — all “hopefully somewhat quick solutions” to help build up our national workforce.
Looking ahead to May 2023
In an ideal world, the panel hopes the May 2023 budget will bring more reforms and more support for SMBs.
One piece of good news, Addison said, is that, even with the change of government, the Deregulation Task Force will continue its important work looking at overlapping regulation. But still, “Small business is crying out for investment,” Allert insisted.
“Australia is a resilient economy and we like a battle — I think it’s part of our nature,” he said. “And so I do think we will fight and push forward. But we definitely don’t want a government to lead us by taxing us to reduce a deficit. Invest in growth, and I think you’ll see that the small business community will stand up for that challenge.”
Read now: What do small businesses want in this year’s Federal Budget?
