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Guest authored by Sam Allert, CEO of Reckon
With 23 per cent of small businesses concerned they won’t exist this time next year without Government support, there were many eager business owners waiting to hear what the Budget delivered on Tuesday evening.
A pre-budget survey conducted by Reckon interviewed over 1000 small businesses and found the following to be on the small business ‘wish-list’ for the Budget.
- Job creation and unemployment reduction
- Mental health support
- Personal tax income reduction
- Cash flow support
- Access to professional advice
- Upskilling and training
With these areas in mind, did the Government deliver for the small business sector this Federal Budget?
Job creation and unemployment
Prior to the Budget, nearly three quarters of small businesses owners reported that they prioritise seeing measures to create jobs and reduce unemployment.
The Budget 2020-21 focused on strong, interventionist measure to drive job creation and keep unemployment low through over $4 billion in JobMaker initiatives. From the perspective of small businesses, the Government has hit the nail on the head with this approach.
We have also seen sizeable Budget boosts for several key industries, particularly manufacturing and infrastructure, so small businesses can expect to see plenty of opportunity for jobs growth in these sectors in the coming month and years.
More than two-thirds of small business said they wanted the 2020 Federal Budget to address provisions for small business mental health initiatives.
It shouldn’t be a surprise that mental wellbeing support is number two on the wish list for small businesses, given business owners have has it particularly tough in 2020. Restrictions, lockdowns and travel bans necessary for guarding community health have subjected small business owners to extraordinary levels of uncertainty and stress this year.
As a nation, we’re becoming much better at recognising the importance of delivering mental health support to the community, so it is excellent to see the Government announce $5.7 billion worth of additional mental health support in FY 2021, including $4.3 million in free mental health support for small businesses.
Personal income tax reduction
The survey found that over two-thirds of small businesses prioritised lower personal income tax rates to encourage consumer spending.
Reduced income tax rates are small businesses’ most wanted tax-related measure for Budget 2020. Business owners want the Government to do all it can to boost consumer spending at a time when households may be tightening their purse strings.
The announcement of tax cuts for 11 million Australians really hits the mark for small businesses. In fact, small businesses would much rather see personal income tax rates lowered (68 per cent), than to see reduced company taxes (35 per cent).
Just under two thirds of small businesses said they would prioritise seeing cash flow support from the 2020-21 Budget.
Cash flow concerns have long been an issue for the Australian small business secotr, so business owners no doubt welcome that cash flow support has been explicitly considered in this budget.
In this context, the Government’s introduction of temporary full expensing is highly significant – it substantially reduces the after-tax cost of eligible assets, which provides a welcome cash flow benefit for small businesses.
It also creates a strong incentive for businesses to bring forward investmenet before the measure expires on 20 June 2022.
Access to professional advice
Almost two-thirds of survey respondents said they would like to see grants for small businesses to seek professional advice or business advice.
This was not delivered for small businesses.
Accountants, bookkeepers and other professional financial advisors are Australia’s first responders when it comes to the economic impact COVID-19 has had on the country. Advice from accredited professionals means peace of mind for small business owners who must navigate a fast-changing tax, business and regulatory landscape.
Grants to access professional financial or business advice are top priority for small businesses, especially at a time when expert guidance for business recovery is critical.
As one of the top five items on the Budget 2020 wish list, small businesses will no doubt be disappointed to see that the Government has not made provisions on this front.
Upskilling and training
More than half of the small businesses surveyed prior to the Budget announcement said they wanted to see Government subsidies for training and upskilling programs.
When it comes to the vocational and trades sectors, the skills initiatives announced as part of both JobTrainer and JobMaker deliver a strong start. However, to widely address the needs of small businesses through the recession, we need to see extensive training and upskilling made available to small businesses across a whole host of sectors – particularly to fortify businesses and digital skillsets.
From this perspective, many businesses owners will welcome the removal of the 47 per cent fringe benefits tax for any retraining and upskilling provided by employers to redundant, or soon to be redundant, employees.
This removes a hefty financial barrier for small businesses to help retrain, reskill and retain workers, keeping people employed throughout the recession.
The pre-budget survey found that more than half of respondents want Budget 2020-21 to deliver grants or incentives for small businesses to digitise.
COVID-19 restrictions earlier this year means we saw high portions of Australia’s workforce and economy move into the digital space within the span of weeks. Business owners understand that this new normal is here to stay and are now looking for Government support to help them further digitise, especially given how critical digital capacity is in modern business operations.
On this front, the Budget has hit the bullseye with $120 million earmarked for measures to help businesses adopt digital technologies, of which almost $25 million will specifically help transition small businesses into the economy.