The federal government is considering policy that could improve SME access to finance, the Small Business Minister has said.
During a Senate estimates hearing on Wednesday (24 October), the Australian Minister for Small and Family Business, Skills and Vocational Education, Michaelia Cash, revealed that ongoing “cabinet-level” discussions were being had about potential policy that could improve SME access to finance — an issue that the Morrison government has repeatedly sought to publicly acknowledge.
The Small Business Minister said that she has been consulting the Department of Jobs and Small Business on the issue, but she did not reveal any details about the policy being considered.
The government is expected to report further details in its upcoming mid-year economic and fiscal outlook in November, in the lead-up to the 2019 federal election.
However, Treasury costs leaked to the media in September indicated that the government had been considering extending the $20,000 instant asset write-off threshold to businesses with annual turnovers of $2 million to $10 million or expanding the $20,000 limit.
But as the government changed the definition of a small business to one with annual revenues of up to $10 million, tax concessions, if they pass the Senate, would be available to all businesses that fall in this category.
Ms Cash, in her first official speech as the Small Business Minister, had also told attendees at the National Small Business Summit in Sydney earlier this year that the government would pursue a policy agenda that would “create the right economic environment” for SMEs.
“As a government, we will be behind you [small business] every step of the way. Thank you for providing millions and millions of Australians with jobs. Thank you for being the bedrock of our local communities,” the Small Business Minister said at the time.
“When small and family businesses prosper and grow, Australia as a nation prospers and grows.”
Ms Cash added: “My role is to represent small business views in cabinet, take on your feedback and continue to create the right economic environment for you to prosper and grow so you can continue to be the engine room of the Australian economy.
“Government needs you to be successful, because when you are successful, our nation prospers, and that is what we all want.”
The Morrison government has since passed legislation to fast-track tax cuts for SMEs, bringing the tax rate down to 25 per cent from 2021–22 for businesses with an annual turnover below $50 million, five years earlier than former prime minister Malcolm Turnbull’s plan.
Unincorporated businesses will also receive a 16 per cent tax discount by 2021–22 under new laws.
The government said that the SME tax cut will cost the public $3.2 billion, which has been partially offset by the $1.3 billion in savings made from scrapping tax cuts for large businesses.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell, had made a recommendation to the government to establish a Business Growth Fund that provides long-term finance solutions to SMEs. Specifically, the ASBFEO suggested that through such a fund, SMEs would be able to apply for loans between $250,000 and $5 million, with terms up to seven years, secured against the business.
The Ombudsman also proposed to launch a government guarantee scheme as well as to establish a fund to reduce the cost of capital by purchasing hybrid capital instruments issued by smaller lenders. These suggestions were acknowledged by the Reserve Bank of Australia.
However, as the Morrison government is now a minority government after former prime minister Malcolm Turnbull gave up his Wentworth seat following the leadership spill that saw him removed from leadership, the current government could have more difficulty passing legislation.
[Related: ScoMo’s SME tax cut plan passes final hurdle]