Small business advocates have cast their verdict on whether the federal budget unveiled on Tuesday goes far enough to support small and medium businesses.
Treasurer Josh Frydenberg delivered the budget on Tuesday night, calling it an outline to secure Australia’s economic recovery by creating more jobs.
Given small businesses employ over 4.7 million people, being 41% of the business workforce, there is a lot to unpack for SMEs.
‘A 7.5 star budget’
Peter Strong, Council of Small Business Organisations (COSBOA), rated the budget 7.5 out of 10, saying it provided solid foundations for SMEs to rebuild their businesses following the economic damage caused by the pandemic.
Strong said the tax relief measures, including an extension of last year’s instant asset write-off and loss carry-back schemes, “are very welcome”.
“They will allow SMEs to keep more of the money they earn as they seek to rebuild their cashflow reserves after the destruction caused by the pandemic,” he said.
However, he noted it was “disappointing” that the tax relief measures do not extend to sole traders.
“We would have rated this budget an 8.5 out of 10 had the government not left out sole traders,” he said.
Digitisation push falls short
The government’s $1.2 billion digital economy strategy aims to encourage SMEs to digitise their operations, with funding for an accelerated e-invoicing plan and the Digital Solutions — small business advisory services program.
Jane Rennie, general manager external affairs at CPA Australia, said of the $1.2 billion digital spend, over $500 million will go towards improving the government’s own digital capability.
“Only $28 million is allocated to help small and medium businesses digitalise,” she said.
Rennie welcomed the government’s investment in regtech, which will help improve the technology SME use to ensure they comply with regulations, such as modern awards. However, she said it addressed just one part of the puzzle.
“Investing in regtech without helping businesses digitalise is a bit like trying to turn half a light bulb on and keep the other half off,” she said.
“It won’t work, it’s short-sighted and really quite disappointing.”
That the budget lacked incentives to encourage small businesses to digitise their operations was a criticism echoed by accounting software provider MYOB.
Helen Lea, chief employee experience officer at MYOB, said while the government had provided valuable support to SMEs, she looks forward to seeing further action on digitisation.
“This will be the ultimate trigger that will see the SME economy recover and flourish,” Lea said.
MYOB modelling shows us one in five SMEs have no or very low levels of digitisation, which equates to half a million Australian small businesses.
To improve that figure, MYOB wants to see the government establish a tax incentive to help SMEs overcome the financial barriers that prevent them from adopting more technology.
“With small businesses contributing 35% of Australia’s economy, we see this as an essential step to assist these businesses in entering the digital ecosystem,” she said.