Small and medium businesses in South Australia will receive cash incentives for each new job created in the next two years, as part of the state government’s efforts to tackle unemployment across the state.
The 2016-17 South Australian budget, which was handed down by Treasurer Tom Koutsantonis on Thursday, includes two incentive schemes for small and medium businesses, in a package worth $109 million.
The Job Creation Grant scheme will pay employers $10,000 over two years for each new fulltime job created between July 1, 2016 and June 30, 2018. The scheme is open to employers that are liable for payroll tax in South Australia and which have a total taxable wage bill of $5 million or less in the financial year immediately preceding the year they wish to claim the grant in.
Under the scheme, employers will receive the grant in two instalments to coincide with the first and second anniversaries of the creation of the particular job. If the hours worked by the new employee are less than 35 per week, the grant will be paid on a pro-rata basis.
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The second scheme funded in the budget, the Small Business and Start-ups Grant scheme, is worth $4000 to employers over two years, and is available to businesses that have a total payroll of less than $600,000, which puts them under the state’s payroll tax-free threshold.
To receive the grant, a business must create a new job of at least 22 hours per week. The $4000 grant will be paid to employers in two instalments of $2000 on each anniversary of the job being created.
To qualify for either the Job Creation Grant or the Small Business and Start-ups Grant, employers will need to register the new employee with RevenueSA within 90 days of an employee commencing work.
Koutsantonis said in a statement on Thursday the government estimates the schemes will provide grants for 14,000 fulltime jobs across South Australia.
“Reaching that target in the current economic climate will be challenging but we need to do all we can to address the state’s high unemployment rate,” he said.
The unemployment rate in South Australia is the highest among all Australian states and territories at close to 7%. Koutsantonis said while there is more work to be done to improve employment opportunities in the state, these grants will “build on our tax reforms and stimulate further job creation in South Australia”.
“We want to reward growing businesses in South Australia and help them grow faster,” he said.
“We are backing SA businesses that want to expand and create more jobs.”
Mark Bevan, managing director of Adelaide-based startup Joust, told SmartCompany his company will factor the grants into their financial modelling and “it could be the difference between a ‘no’ decision and a ‘go’ decision” to hire a new employee.
“Hiring, particularly making a commitment to new full time employees, is a massive challenge for startups. Anything that reduces the financial risk I would consider very helpful,” Bevan says.
“Management of cashflow – and making sensible, small investments are a prime focus for small business and start ups. A cash incentive can have the effect of tipping the risk scales of making an investment in a new employee or a contractor in favour of proceeding.”
BDO partner David Fechner also backed the measure, saying in a statement the grants schemes are good news for South Australia’s 90,000 small businesses.
“In a flat economy the state government has substantially shifted its approach to small business and is finally looking at this sector to create jobs and growth,” Fechner said.
“The incentives announced today are good news for those business owners striving to diversify their offering and stay relevant to their customers amidst shrinking margins and attempts to deliver more with less resources.”
Other measures to help SMEs in South Australia
The 2016-17 South Australian budget includes a number of other measures that could help SMEs. These include:
Payroll tax rebate extension
The SA government has extended the small business payroll tax rebate for another four years, which is claims will save eligible businesses as much as $9,800 each year. The rebate was first introduced in the 2013-14 state budget and provides a 2.45% rate cut for businesses with payrolls up to $1 million. The government extended the rebate for 12 months in last year’s budget and following the latest extension, it will now run until the 2019-20 financial year.
Access to faster internet
The 2016-17 state budget includes a provision of $4.65 million to make Adelaide part of the global Gig City network. This will involve giving businesses access to SABRENet, a high-speed, optical fibre network currently used by the state government and universities. The roll out of the Gig City network to Adelaide is expected to start at the end of the year.
Promotional support for retailers
The government will also provide $2 million for a 12-month campaign to encourage South Australians to shop with local businesses. The “Choose South Australia” campaign will be run by Brand South Australia and will aim to raise the awareness of South Australian made goods and services.
Funds to attract business to the state
The government has allocated an additional $20 million over two years to the South Australian Economic Investment Fund, which aims to attract new businesses to the state.
Cash for business advice and mediation
SMEs that export are expected to benefit from an additional $600,000 in funding for Business SA to provide a coaching and advisory program in this area. The Office of the Small Business Commissioner will also receive more than $1 million to fund mediation services.