There were definite wins for small businesses in this year’s budget, but some experts say it didn’t go far enough in supporting technology and digital innovation. In an uncertain business landscape set against a global pandemic, many were wondering how this budget would set the roadmap for small business recovery.
According to MYOB research, the majority (over 60%) of SMEs have been satisfied with the Federal Government’s handling of COVID-19 from both an economic (62%) and health perspective (65%). But does the budget have SME interests at heart?
To unpack what this year’s budget means for small business, MYOB chief executive Greg Ellis spoke with Kate Carnell, ASBFEO, on a recent SmartCompany webinar where they discussed the winners and losers from this year’s budget.
“A 7 out of 10 for stability”
A key positive was tax cuts designed to inject cash into the economy and get SMEs back on track.
This was one of the top measures SMEs wanted to see in the budget, with 31% saying they wanted a lowering of the company tax rate.
“The budget gets a 7 out of 10 for stability — it provides an underlying floor to the economy,” Ellis said.
Ellis pointed out the budget’s strengths lie in its spending on a range of infrastructure, education, and welfare tax cuts.
“They’ve done a tremendously good job underpinning the key elements,” he said.
Carnell adds that while businesses “don’t have hollow logs” of cash supplies they can tap into, the tax cuts are there to encourage businesses to start spending again and support small business recovery.
“What this budget does is it injects cash back into the economy via the tax cuts. It puts money in people’s pockets,” she said.
Digital innovation misses out
Ellis said that while the government should be given “a pat on the back for the financial courage to spend $98 billion,” he notes that more could be done to support digital SMEs in this budget.
“Prior to COVID-19, the evidence was extremely clear,” said Ellis.
“SMEs investing in digital were growing faster than those companies that were not, they were employing more people than those companies who were not, and they were seven times more likely to be exporting their product and services than companies who were not.”
But despite the growth digital SMEs contribute to the economy, intangible assets such as SaaS software and cloud costs were overlooked by the instant asset write-off, which instead favours physical assets.
“The instant asset write-off rewards physical assets — and the digital economy is not physical,” Ellis added.
“I think the key focus for the government going forward should be to get on the digital train as quickly as we can and allow SaaS investment to be encouraged.”
“They just want a fair go”: Local spending saves SMEs
Carnell and Ellis agree that in order for this budget to work, Australians need to shift their spending habits locally.
“This is a good budget, but it’s going to rely on confidence from small business, and confidence from the community,” Carnell said.
She notes that there is a trend toward Australian consumers preferring to shop locally — a much-needed cash injection for struggling small businesses, but at odds with previous online trends.
Citing NBN research, Carnell noted that 49% of people were buying more online — and 70% of those people wanted to deal with local companies.
“It’s wonderful that Australians are saying ‘I want to support Australian businesses, particularly Australian SMEs,’” Carnell said.
“Let’s ask consumers to focus on buying locally from Australian companies. And as businesses, let’s utilise this interest in buying Australian more aggressively.”
Ellis remarked that it’s community support for small business recovery — underpinned by the tireless Australian spirit of mateship and equity — that will see SMEs through the pandemic.
“It’s about the entrepreneurial spirit — they just want a fair go: a level playing field, and access to opportunity.”
MYOB is a leading business platform with a core purpose of helping more businesses in Australia and New Zealand start, survive and succeed. At the heart of MYOB is a customer base of 1.2 million businesses and a network of more than 40,000 accountants, bookkeepers and consultants, for whom MYOB delivers end-to-end business and accounting solutions. MYOB operates across four key segments: Small and Medium Enterprises (SME), Enterprise, Financial Services and Practice.