The 2024-25 Federal Budget announced last night features many measures to support retailers and small businesses. However, there were several missed opportunities, say industry bodies.
Targeted relief
The Australian Small Business and Family Enterprise Ombudsman Bruce Billson says last night’s federal Budget offers targeted measures to help small and family business deal with current pain points and headwinds.
“Small and family businesses facing punishing input costs that are squeezing margins will welcome the modest energy bill relief of $325,” Mr Billson said. “Every saving helps the small businesses who are doing it tough in our community.
He also welcomed the decision to extend the instant asset write-off for a further 12 months for businesses with a turnover of up to $10 million, allowing them to deduct $20,000 for eligible assets. However, ASBFEO notes the instant asset write-off measure announced in last year’s budget has still not been passed into law, creating some uncertainty for small businesses.
“This uncertainty has highlighted the benefits of greater predictability to support business planning and investment, reflected by small business groups calling for it to be made permanent,” he said.
Another highlight for small business is the is the extended funding for mental health support through the New Access for Small Business Owners program created by Beyond Blue and the Small Business Debt Hotline delivered by Financial Counselling Australia.
“We have seen a 20 per cent increase in calls to our helplines over the past year from small businesses struggling to manage their debts,” Mr Billson said. “It is vitally important that small business owners take time to focus on their own mental and financial wellbeing and these free services are provided by people who understand the realities of running your own business and can offer practical help.”
ASBFEO also welcomed investments that would help small businesses comply with increasingly complex workplace laws and those that will enable key regulators to enforce mandatory codes for service providers that small businesses rely on.
“Sluggish growth combined with persistently poor productivity, tight labour markets, supply chain challenges, and the lagging effects of high inflation, plus 13 interest rate rises, are taking their toll on small and family businesses,” Mr Billson said.
“We need to get the risk and reward balance right, ensuring small business and entrepreneurship is a really attractive option for people, then create a supportive ecosystem to give enterprising people the best chance to be successful.
Cost-of-living relief
The Australian Retailers Association (ARA), welcomed measures to address the country’s cost-of-living crisis and boost confidence during these challenging times, which will have a flow on impact on the retail. However, with retail employing one in ten Australians, more needs to be done to support small business, fund employment pathways for retail and incentivise the transition to a circular economy, says ARA CEO Paul Zahra.
“Whilst the cost-of-living measures, as well as the Stage Three Tax Cuts, will provide some relief, we recognise little will shift for Australian households until interest rates ease,” he said.
“Australians are desperate for financial relief, and so too are retailers. Business costs remain dangerously high without productivity improvements and discretionary spending is softening significantly in the wake of tightening household budgets.”
Whilst a number of measures advocated for by the ARA to assist businesses were addressed, more could have been done to assist businesses, particularly small business, says Mr Zahra, pointing to a proposed expansion of the small business tax rate of 25% to include medium size businesses with revenue up to $100 million (up from the current threshold of $50 million) and continued investment in vocational training options for the retail sector.
“It’s understandable in a cost-of-living crunch, that the focus has been on helping everyday Australians. However, it’s important not to overlook the needs of business and small business in particular. Retail employs many Australians and without a strong retail economy it is unlikely that we will see an economic recovery,” Mr Zahra said.
ARA also welcomed the measures provided for women in the Budget, including the multi-million dollar support for victim-survivors of domestic violence, pay superannuation on government-funded paid parental leave and increased award wages for childcare workers to provide more capacity in the system for the benefit of Australian families. It also welcomed the government’s Future Made in Australia, helping to accelerate the transition to the net-zero economy.
Mr Zahra said the budget missed crucial opportunities including the need to co-invest in large scale recycling infrastructure to meet Australia’s circular economy targets within areas such as textile, food and plastics waste.
“Investment in recycling infrastructure is urgently needed – so the hard work of the industry and everyday Australians doesn’t go to waste. For instance, compostable packaging is a fantastic initiative, but only if large-scale facilities are in place to process it and prevent it going to landfill,” he said.
Missed opportunity to encourage small business
The budget outlined some cost-of-living relief for Australian households, but it only included a small amount of energy cost relief for struggling small businesses.
CPA Australia Chief Executive Officer, Chris Freeland says small businesses – most of which already have very thin margins – desperately needed a budget that would help alleviate the cost pressures they are facing on a daily basis.
“While the emphasis on relieving pressures on household finances was expected, a more business-centric budget would benefit all Australians as small businesses are significant contributors to the economy and job creation,” he said.
Mr Freeland welcomes the one-year extension to the instant asset write off for smaller businesses, and investments in supporting businesses in distress and those facing mental health issues.
“But there is little in the way of additional funding for programs aimed at preventing businesses getting into trouble in the first place and enhancing business owners’ skills to help these businesses grow,” he added.
As research from CPA Australia shows, Australian small businesses trail behind most countries in the Asia-Pacific region when it comes to business innovation, use of new technology and are ultimately less likely to experience growth.
“Government support for initiatives like cyber-security will help Australian small businesses catch up to their regional counterparts,” he said.
“The range of targeted small business support in this budget makes sense, but a more comprehensive look at the sector is needed. We look forward to the proposed National Small Business Strategy that will help business, community and government work together to nurture and grow our economy.”
Budget highlights
- Cost-of-living measures to relieve pressure on families and lower income households including Energy bill relief of $300, the extension of superannuation on Government-funded Parental Leave and boosting support for Australians facing acute and urgent cost-of-living pressures, through crisis support and emergency relief.
- Stage Three Tax Cuts, reducing the 19 per cent tax rate to 16 per cent, reducing the 32.5 per cent tax rate to 30 per cent and increasing income bracket thresholds.
- Continuation of $20,000 instant asset write-off for small businesses with turnover under $10 million plus a $325 rebate for energy relief for up to a million small businesses.
- Over $30 million in a suite of measures to support small businesses to be secure online while they adopt and harness digital opportunities.
- Investing $10.8 million to support the mental health and financial wellbeing of small business owners by extending the NewAccess for Small Business Owners program, which provides tailored, free, confidential mental health support to small business owners.