The budget deficit will increase $10 billion over the next four years, according to the government’s Mid Year Economic and Fiscal Outlook, however Treasurer Scott Morrison says we’re still on track to return to surplus by 2020-21.
After a year of political leaders again talking about how small businesses and SMEs are the key to powering Australia’s economy into the future, there was little talk of plans for the innovation nation on Monday; instead, Morrison and Minister for Finance Mathias Cormann spoke of the challenging economic environment facing their government in its bid to repair the budget. Tax receipts are down $3.7 billion since the Pre-election Economic Fiscal Outlook (PEFO), and government debt will climb to $20 billion in 2018/19 before the government believes it will be able to claw things back towards the black.
Morrison was keen to highlight that there’s been a $2.5 billion improvement in the budget bottom line through the government’s implementation of policies, but where do SMEs stand, given there have been so many measures announced over the past year?
Here’s 11 key measures outlined in this year’s MYEFO that set the tone for the year ahead.
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1. Improving transparency on tax debts
Cost: $27 million over four years, with an estimated gain of $63 million to underlying cash balance over forward estimates
What it means: From July 1, 2017, the Australian Taxation Office will be allowed to disclose information about a business with an Australian Business Number to credit reporting agencies if that business has a tax debt of $10,000 or more that is at least 90 days overdue.
The government says it expects the change will encourage businesses to pay their tax debts in a timely fashion to avoid doing damage to their credit ratings.
2. Black economy taskforce
Cost: $1.6 million
What it means: Announced last week, the taskforce will consider the future of the $100 note, scrutinise the tax implications of the sharing economy, and workshop ways to recoup lost revenue through the cash economy. It will get $1.1 million in funding its first year of operation, and $500,000 in 2017-18.
3. Abandoning ASIC privatisation
Savings: $4.5 million will be returned to budget in 2017.
What it means: The tender process for the Australian Security and Investment Commission’s registry services was unpopular in the SME space, with fears a sale would increase fees for company registration and compliance and add additional complications for smaller operators. The government has decided to abandon the plan, given a privatisation process would end up costing the Commonwealth money.
4. Reducing the number of ads for “reducing red tape”
Savings: $8.1 million to be returned to budget over two years
What it means: The Reducing Red Tape – reforms to the Australian Taxation Office “information campaign”, announced in the 2015-16 budget, has met an untimely end, saving the budget more than $8 million over two years from 2017-18. “The savings from this measure will be redirected by the government to fund policy priorities,” said the government in the MYEFO statement.
5. Fair Entitlement Guarantee Recovery program scheme
Cost: $47.2 million over four years
What it means: The Fair Entitlement Guarantee provides assistance for workers’ unpaid entitlements in the event they are left out of pocket when a company enters liquidation or bankruptcy. The Fair Entitlement Guarantee Recovery program allows liquidators to apply for litigation funding for recovery activities when a company collapses. After a pilot program the government now says this will be an ongoing scheme, and efficiencies of $16.9 million can be found over four years, with an extra $165.7 million expected to be recovered over that time due to the expanded scheme.
6. Superstream gets a new master
Cost: $2 million
What it means: From 2018 the infrastructure for the government’s electronic super payments platform Superstream will no longer be the responsibility of the Australian Taxation Office, with an industry body called the Superstream Gateway Network Governance Body taking over.
7. Industry Skills Fund ends
Savings: $119.1 million over four years
What it means: The Industry Skills Program was designed for SMEs and micro businesses to receive skills training advice and funding so that businesses could train staff in areas they needed for growth. Applications for grants are open to December 31 but once all grants have been assessed and completed no new funds will be provided to the program. The government says this will result in a saving of approximately $120 million over four years.
8. Changes to franked distributions funded by capital raisings
Savings: $30 million over forward estimates
What it means: From lunchtime today, the government expects to recoup $30 million by preventing distributions made to shareholders from having attached franking credits if companies fund this through capital raisings such as underwritten dividend reinvestment plans or rights issues.
9. Finding efficiencies when “inspiring Australians” on STEM
Savings: $1.8 million over three years
What it means: “Uncommitted funding” from the Inspiring all Australians in Digital Literacy and Science, Technology, Engineering and Maths program will be returned to the budget, with the programs that have been started off the back of the policy initiative to be seen through to completion.
10. Supporting women and girls in STEM
Cost: $31.2 million over four years
What it means: The government’s commitment to assisting more women and girls into careers in STEM industries will be honoured through more than $30 million in programs, such as a $20 million internship program for postgraduate researchers through the Australian mathematical sciences institute.
11. New VET loans program to come into effect
Cost: $66.9 million in underlying cash terms over four years, with estimated savings of $25 billion in HELP debt over 10 years.
What it means: In October a new funding program for vocational education was announced, with a new list of approved courses eligible for government funding. MYEFO confirms the scheme will kick in on January 1, 2017, and will include the appointment of a VET student loans ombudsman to sit within the Commonwealth Ombudsman’s office.