Treasurer Scott Morrison released the budget for 2018–19 this week, outlining a range of measures and initiatives that aim to benefit small business. We take a look at some of the key measures and what industry reaction has been so far.
Budget 2018–19 has been released, with the Treasurer announcing a range of changes, tax cuts and new initiatives for the year ahead.
The Honourable Scott Morrison MP, Treasurer of the Commonwealth of Australia, released Budget 2018–19 on 8 May, outlining the measures that the Turnbull government will take in the year 2018–19.
Several initiatives focused on small business, about which Mr Morrison said: “In this budget, the Turnbull government is backing business to create more jobs.
“We have already legislated tax cuts for small and medium-sized businesses.
“Full implementation of our Enterprise Tax Plan is needed for our businesses to remain internationally competitive, invest, create more jobs, boost wages and increase trade for smaller businesses.
“In this budget, we are making sure small businesses don’t get ripped off by other businesses who deliberately go bust to avoid paying their bills, with tough new anti-phoenixing measures.
“And we will invest more in our people, providing an additional $250 million for the Skilling Australians Fund to deliver business with the people and skills they need to grow their business.”
In a bid to help small businesses “grow, export and create jobs”, the government, among other measures, will:
Industry welcomes budget, calls for more action
Several industry players have welcomed the budget and the measures for small businesses, with others arguing that it could have gone further.
Speaking to The Adviser, Yellow Brick Road’s executive chairman, Mark Bouris, said that the budget was “sensible, given the politics and given what the economy needs”.
He continued: “Clearly, the asset writes-off, that is good that it has been extended until next year. It’s showing the government’s willingness to further small business. They’ve already enacted the reduced rate tax for small businesses.
“But the most important thing for SMEs is that we will have a surplus in 2020. SMEs do far better in economies that have surpluses than they do in any other type of economy because there is confidence, and marketplace confidence is incredibly important when it comes to building GDP.”
Mr Bouris elaborated: “Consumers need confidence to engage with SMEs, so I think that is one of the most important things that has come out of the budget — the confidence setting up for 2020.”
He also welcomed that the government had committed to set aside half a million dollars for the development of a response to the findings of the Small Business Digital Taskforce, which he is leading as chairman.
He said: “As chair of the Small Business Digital Taskforce, I made a recommendation to [the] government on 30 March as to what [it] needs to do to ensure small businesses can thrive in an increasingly digital economy.
“So, the government has allocated half a million dollars for a scope report on how to digitise small businesses in Australia. The whole purpose of this is to get us up to speed with the rest of the world, but also to give people more time, either to spend on themselves or their families and be happier or be more productive.”
Several representatives from the lending sector have also given their thoughts on the budget. Angus Sedgwick, CEO of The Invoice Market (tim.) said that he was “pleased to see the extension of the instant asset write-off scheme which helps ease pressures on cash flow while enabling SMEs to focus on running their business”.
He added: “Cash flow is an incredibly important part of all businesses and this is one of many levers the government can use to help drive in growth in businesses.
“The deliberate liquidation of a company to avoid paying its creditors and employees has a devastating effect on the SME sector. We welcome legislation and a dedicated task force to protect and enforce against this behaviour.”
Likewise, Tyro CEO Robbie Cooke welcomed that the Treasurer had highlighted the importance of small business community, adding: “These comments were backed up by action with numerous SME-friendly initiatives identified within the budget — from the extension of the $20,000 instant tax write-off to the $40 million to assist Australian SMEs to expand overseas and export to global markets, as well as the maintenance of the previously announced tax cuts for SMEs.
“The Skilling Australia Fund, helping people with growing businesses to develop support skills, is also of great importance at this time as disrupted markets and global competition are making life more challenging for many businesses.”
Beau Bertoli, joint CEO of soon-to-be-listed fintech lender Prospa, also welcomed the extension of the instant asset write-off and the commitment to Open Banking and Consumer Data Right legislation, but he said that the budget could have gone further.
“It’s great to see the government continuing to support and invest in Australia’s fintech sector. However, we had hoped to see some measures that would reduce the relative advantage enjoyed by larger banks.
“Promoting the ability of non-banks to access lower-cost wholesale funding would have fundamentally leveled the playing field in the finance industry. This would mean companies like Prospa could provide small business owners with even easier, lower-cost access to finance and create a more competitive finance market — something Australia badly needs,” Mr Bertoli said.
Peter Langham, CEO of Scottish Pacific, praised the personal tax cuts that would “give SME owners more money to spend”, but he added that he believes the budget could included more for SMEs. He said: “There are three obvious areas in the federal budget where more could be done for the SME sector: encouraging employment, creating more skilled labour and further simplifying company taxation.
“It wouldn’t be an easy task, but I’d love to see the federal government working with the states to reduce the payroll tax regime — this would be a game-changer for small business. A growing business gets to a certain size and this tax discourages them from employing people, so in effect it discourages growth.”
Meanwhile, Mandeep Sodhi, CEO of HashChing, said that it was a “mistake” to bring in a $4 million cap on the cash refund available to companies with annual turnover of less than $20 million.
“To make it harder for businesses to take advantage of the research and development (R&D) tax incentive is a mistake,” the CEO said. “It will only serve to stifle innovation, forcing our best and brightest to relocate to countries where innovation is fostered and better supported by the government, putting plenty of local jobs on the chopping block.
“If Australia is to truly compete on a global playing field, then the government needs to make a substantial investment into R&D, not make it harder for start-ups and disruptors to undertake cutting-edge research and development of new products and services.”
[Related: Budget 2018–19 released]
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