Small business minister Craig Emerson proudly says in one of his budget media releases that today’s personal income tax cuts are good for small business.
That’s just as well, because there’s nothing else for them in the budget.
In fact, the small business community will be reeling from a series of cuts to business assistance programs, the largest of which is the cancellation of the$700 million Commercial Ready program that helps SMEs innovate and commercialise new technology.
There are also cuts to a Building Entrepreneurship in Small Business Program (a $10.5 million snip over four years), the National Nanotechnology Strategy (an $11.7 million snip) and the Global Opportunities Program (another $62.6 million snip).
Just to rub a bit of salt into the wound, treasurer Wayne Swan has slashed access to a special entrepreneurs’ tax offset (a saving of $90 million), tightened FBT laws that many small businesses use as an essential part of their salary packaging (which will cost business $1.4 billion over the next four years) and changed the depreciation laws on computer software (which will cost business $1.4 billion over the next four years).
Small business operators would understand that they have to take some of the pain from spending cuts. But given the huge $21 billion surplus handed down by Swan and the fact that these program are hardly inflationary, business operators could be forgiven for asking: why us?
It is the cancellation of the Commercial Ready scheme that will anger small businesses groups the most. Australian industry has always struggled with the commercialisation of technological innovations and the Commercial Ready program was seen as a vital part of the government’s efforts to lift business performance in this area.
The government says it will consider other funding mechanisms after it has completed its innovation review, which is being chaired by Terry Cutler. But given that Wayne Swan has his fingers tightly on the purse strings, small business won’t be holding its breath for a flood of funding in the near future.
There are some positives for this budget. As Emerson says, the personal tax cuts will help out some small business operators that draw a salary, although business groups’ calls for business tax relief have gone unheard.
The large increase in the establishment of funds for infrastructure, education and health will be welcomed, as will funding for university research places and training places.
But most of these initiatives are simply election promises made good. Small businesses looking for some dynamic new direction from the Rudd government’s first budget will be sorely disappointed.
The engine room of the economy has been ignored.
