Budget 2024: Retailers Say Budget Could Have Done More for Small Business

The Institute of Public Accountants also said that the budget lacks genuine tax reform and targeted red tape reduction.

Customers are seen in the food court area of Broadway Shopping Centre in Sydney, Australia, on Aug. 6, 2020. Lisa Maree Williams/Getty Images

Retailers and accountants flagged the federal budget’s lack of support for small businesses, especially amid a cost-of-living crisis.

“In our pre-budget submission, we encouraged the government to expand the small business tax rate of 25 percent to include medium size businesses with revenue up to $100 million, from the current threshold of $50 million, and we’re disappointed this wasn’t adopted,” Paul Zahra, CEO of Australian Retailers Association (ARA), said.

“Also in our pre-budget submission, we called for continued investment in vocational training options for the retail sector and we were disappointed that previous decisions to reduce investment in training for some front-line retail roles were not reversed tonight.”

Similarly, Institute of Public Accountants (IPA) CEO Andrew Conway said small business owners were not “charmed” by the budget, citing the lack of genuine tax reform and targeted red tape reduction.

“It is critical that the government recognise the vital role small business plays and the very real challenges they have,” Mr. Conway said. “When small business is struggling, Australia is struggling. They need assistance now to remain viable, or they’ll become history.”

Currently, there are 2.5 million small businesses nationwide, contributing more than $500 billion to the economy, and employing around 5.2 million people.

However, CPA Australia said that according to its research, small businesses lag behind most countries in Asia-Pacific in terms of innovation and new technology adoption.

“Government support for initiatives like cyber-security will help Australian small businesses catch up to their regional counterparts. The rebranded MyGov will also bring greater security when interacting with the government. These are all steps in the right direction,” CPA Australia CEO Chris Freeland said.

“The range of targeted small business support in this budget makes sense, but a more comprehensive look at the sector is needed. We look forward to the proposed National Small Business Strategy that will help business, community and government work together to nurture and grow our economy.”

While the budget will provide a continuation of a $20,000 instant asset write-off for small businesses with turnover under $10 million, plus a $325 rebate for energy relief for up to a million small business, IPA’s Mr. Conway said that it might already be too late as business owners may no longer be interested to invest in ageing capital assets until they see an improvement in profitability.

ARA’s Mr. Zahra also called for investment in recycling infrastructure, which he said the budget missed and is crucial to meet Australia’s circular economy targets within areas such as textile, food and plastics waste.

What’s Allocated to the Small Business Sector

Meanwhile, the budget has also allocated $25.3 million to improve payment for small businesses, as well as a further $23.3 million to boost productivity for small businesses and disrupt payment redirection scams.

Moreover, the budget has earmarked $20.5 million for the Fair Work Ombudsman to help small business employers to comply with workplace laws and $60 million for the Productivity, Education, and Training Fund to support activities that boost workplace productivity.

The Industry Growth Program will also receive $392.4 million to help start-ups and small businesses grow by allowing them to innovate and commercialise their ideas.

As part of the clean energy transition, the government will allocate $62.6 million in Energy Efficiency Grants for the Small and Medium-Sized Enterprises program. This will provide businesses with up to $25,000 in energy upgrade funding.

A further $290 million in budget funding will be given to extend the $20,000 instant asset write-off for depreciating assets until June 30 next year, a step to help small businesses address labour and skills shortages.

The government is also investing $88.8 million to provide 20,000 fee-free TAFE places in courses relevant to the construction sector and 300,000 places in areas of priority skills.

“The government recognises that some small businesses continue to face challenges, dealing with inflation and the cost of doing business, natural disasters, cyber security threats and worker shortages,” Minister for Small Business Julie Collins said.

“That is why the government is delivering practical supports to ease the pressure on small businesses. We continue to focus on making it easier to do business, improving regulatory settings and helping small businesses grow in the digital economy.”

Businesses Commend Tax Cuts, Energy Bill Relief

Despite the concerns, ARA’s Mr. Zahra commended the budget’s provision to reduce the 19 percent income tax rate to 16 percent, and the 32.5 percent tax rate to 30 percent.

In addition, he lauded the energy bill relief of $300 and the extension of superannuation on government-funded parental leave, as well as crisis support and emergency relief.

“We welcome measures that provide cost-of-living relief and boost confidence during these challenging times, which will have a flow on impact on the retail,” Mr. Zahra said.

The Australian Food and Grocery Council (AFGC) also commended the budget’s focus on manufacturing.

“Modernising the food and grocery manufacturing sector through new green technologies is in line with the goals of investing in a Future Made in Australia. This would help future-proof our sector, which supports over 270,000 jobs in Australia,” AFGC CEO Tanya Barden said.

“Prioritising our food and grocery manufacturing sector through investment incentives would improve innovation, lower carbon emissions, help boost domestic production and grow international presence for Australian-made consumer goods.”

At the upcoming Small Business Ministers’ Meeting in June 2024, the government is set to explore options for a National Small Business Strategy to create a coordinated and cohesive national approach.