Thursday, May 30, 2024

2022 budget wrap

Retail World takes a look at the 2022/23 Federal Budget and industry responses.

Cost-of-living measures

Cost of living relief formed a key component of the Federal Budget. A “temporary, targeted and responsible cost of living package” was announced to ease some of the pressures stretching household budgets.

The measures included:

  • a one‑off $420 cost of living tax offset for more than 10 million low‑and‑middle income earners. Individuals already receiving the low- and middle-income tax offset will now receive up to $1,500 and couples up to $3,000 from 1 July.
  • a one‑off $250 Cost of Living Payment, delivered within weeks to 6 million Australians. Pensioners, carers, veterans, job seekers, eligible self‑funded retirees and concession card holders will benefit.
  • greater access to cheaper medicines for 2.4 million Australians.
  • temporary halving of fuel excise. Taking effect from midnight last night, the savings will flow through to the bowser over the next 2 weeks for the next 6 months. Australians will save an estimated 22 cents a litre every time they fill up their car. The ACCC will monitor retailers to make sure these savings are passed on in full.

“This Budget’s new cost of living package is responsible and targeted, delivering cheaper fuel, cheaper medicines and putting more money in the pockets of millions of Australians,” Federal Treasurer Josh Frydenberg said.

Retailers have welcomed the cost-of-living measures.

National Retail Association CEO Dominique Lamb predicts struggling retailers will benefit, with spending to flow strongly to business bottom lines.

“Consumer cash flow is the lifeblood of many small retail businesses, and fuel excise cuts and cash handouts will help counteract the steep revenue drop experienced at the beginning of the year,” Ms Lamb said.

“The budget is taking steps towards economic recovery for the businesses and people heavily impacted by the effects of the pandemic.”

Australian Retailers Association CEO Paul Zahra said payments from the cost of living package are set to flow through to the retail economy and fuel excise cuts will also “help alleviate some of the skyrocketing delivery costs, which ultimately are passed onto consumers. However, challenges remain in the long-term once these temporary measures expire”.

Backing small business

The Budget includes rewards for small businesses that invest in skills and new technology:

  • For every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction.
  • For every hundred dollars these small businesses spend on digital technologies like cloud computing, eInvoicing, cyber security and web design will see them get a $120 tax deduction.

“Lower taxes for small business is part of our plan for a stronger future,” Mr Frydenberg said.

It also includes several new, extended and enhanced measures to support the central role of small and family businesses in driving employment and economic growth.

These include:

  • Tax system reform and administrative streamlining
  • $480 million to significantly upgrade NBN fixed wireless services
  • $10.4 million to redesign the Payment Times Reporting Portal and Register to improve efficiency and reporting
  • Significant financial allocations to the Australian Small Business and Family Enterprise Ombudsman (ASBFEO, the Fair Work Commission and Beyond Blue for units and programs to support small business,
  • $2.1 million to extend the Small Business Debt Helpline program

The ASBFEO Bruce Billson welcomed the targeted support.

“[This] budget represents a financial and strategic commitment to ensuring small and family businesses are digitally enabled, resilient and have the support, incentives, skills and training needed to be truly competitive,” Mr Billson said.

Welcome boost for regional manufacturing

Support for regional food and grocery manufacturing was announced in the form of a $2 billion Regional Accelerator Program (RAP), a $500m boost in funding for regional business through the Modern Manufacturing Initiative (MMI) and a $200m increase to the Supply Chain Resilience Initiative.

The Australian Food and Grocery Council (AFGC) CEO Tanya Barden said the targeted funding will strengthen regional food and grocery manufacturing.

“The past two years have underscored how critically important a strong, sovereign food and grocery manufacturing industry is for Australia. The support for regional manufacturers, who are major employers and providers of essential items, is a significant boost,” she said.

The AFGC also welcomed the further $328.3m provided for the MMI’s six national manufacturing priorities (including food and beverages) over the next five years. However it also noted that this is “inadequate” given the investment challenges faces by the food and grocery sector, for which the AFGC has developed a vision for doubling the size of by 2030.

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