10th May, 2023
Labor’s much anticipated 2023 Federal Budget delivered on promises to address rising cost of living stress, with a Medicare boost and energy bill relief at the forefront of these measures.
Prime Minister Anthony Albanese and Treasurer Dr Jim Chalmers were emphatic about their focus on delivering cost of living relief without adding to inflation stress.
For small businesses, the 2023 Federal Budget committed to initiatives targeted to support businesses at all stages of the growth cycle, including supporting startups to commercialise their ideas, investing in establishing industry growth programs for small and medium sized enterprises (SMEs) and extending and increasing the instant asset write off.
MYOB’s Chief Employee Experience Officer, Helen Lea, said while outcomes support SMEs in the short term, there is a greater opportunity to enable businesses to make future-focused investments for growth.
“Tonight the Government announced a range of measures to support the SME community, such as the extension of the instant asset write-off,” Ms Lea said.
“While this particular measure will be welcome news for SMEs, we need to re-think what constitutes an ‘asset’ and include or replace these with the incentivisation of modern, digital tools to deliver greater productivity benefits.”
Ms Lea noted there’s more that can be done to help maximise the outputs of the economy’s engine room: small businesses.
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“We would have liked to have seen more targeted outcomes for the meaningful digital progression of the sector, to inspire confidence and encourage investments to enhance productivity for businesses, and in turn, national growth,” Ms Lea said.
“In a market where SMEs need to achieve more with less, we want to see more support to help small businesses to adopt digital tools to increase efficiency and help SMEs navigate these tough times.
“Last October, this Government committed to the legislation of the Small Business Technology Investment Boost, which would see businesses receive a 20% tax rebate for investment in cloud-based software.
“This legislation expires at the end of this financial year and is still not passed, leaving SMEs without the certainty they need to invest.”
This budget has clearly sought to target hip pocket and cashflow benefits — however, the Government has prioritised initiatives seeking to support SMEs through reduced compliance burdens, as well as small business innovation.
New measures introduced seek to reduce SME tax-related compliance red tape; while $392.4m has been allocated to establish an Industry Growth Program, which will support SMEs and startups to commercialise their ideas and grow their operations.
Other key inclusions for SMEs include the temporary boost to the Instant Asset Write-Off (IAWO) to $20,000, applicable for multiple assets within the 23/24 FY.
In effect this means SMEs will be able to benefit from an immediate deduction of the full costs of any business asset up to $20,000.
SME cashflow will also be boosted through halving the PAYG and GST instalments (from 12% to 6%) for the next financial year.
The flagship announcement of this Federal Budget is a significant commitment to cost of living relief.
In addition, there are significant affordable housing announcements (including a flagged rental agreement with state and territory governments), an increase in the availability of medicines on the PBS, energy bill relief, expanding the single parent payment, and increasing the childcare subsidy.
All these measures will indirectly help support business owners who are presently struggling with the rising cost of living.
The World Bank’s 2023 Global Economic Prospects Report identifies that investment in digital capabilities offers strong investment growth potential for global economies.
In particular, fiscal policies that balance private and public investment in digital capabilities are a key mechanism to reduce inequality in skills and protect against global economic pressures.
“MYOB modelling found the return on investment for the adoption of digital tools by small business is 25:1. With small and medium sized businesses already contributing $700 billion to the economy, helping them to adopt digital tools would go much further than just weathering this short-term economic uncertainty,” Ms Lea said.
Only 50% of the latest respondents in MYOB’s research are using digital cloud-based software in their business for core workflows such as accounting, finances, supply chain and employee management. For one fifth of small businesses respondents, cost is still the top barrier to adopting digital tools.
“Small businesses employ over 7.4 million Australians and make up 99% of Australian private enterprises,” Ms Lea said
“They are the lifeblood of the economy and the Government needs to deliver support for them to ensure the security of the economy at large. We are somewhat encouraged by what we’ve seen tonight but look forward to seeing more direct focus in areas we know will set the small business community up for success in the near future.”
SMEs play a crucial role at the heart of our community and economy. Ensuring these businesses have the skills and access to digital tools is essential to help build a strong national economy.
While this Budget addressed necessary cost of living stresses, there has been a missed opportunity to revitalise the economy with a longer-term view to growth.
In particular, it was disappointing to not see the inclusion of the Technology Investment Boost, particularly when there was a measure dedicated to “amending measures of the former government”.
Ultimately, the pragmatic outcomes delivered in this Federal Budget will provide ongoing support for small businesses across the country as they continue to weather a tough time.
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