Thursday, April 25, 2024

The Budget’s relief for retailers and consumers

According to the Albanese government, its 2023‑24 Budget “addresses the immediate challenges Australians are facing, better shares the opportunities in our society and builds a stronger and more secure economy”.

“Australians have shown resilience in the face of heightened global uncertainty, persistent inflation and higher interest rates, which are combining to slow our economy,” says Treasurer Jim Chalmers.

“The best response to these challenges is a responsible budget that strikes the right balance between easing cost of living pressures, securing the essential services people rely on and laying the foundations for future growth.”

Retail World takes a look at the Budget’s relief for retailers and consumers.

Cost‑of‑living relief

The Budget provides cost‑of‑living relief that is “affordable and prioritises those most in need”, including:

  • Providing energy bill relief to over five million households and one million small businesses.
  • Helping 170,000 households save on energy bills by financing energy saving home upgrades.
  • Cutting the cost of medicine by up to half for at least six million Australians.
  • Supporting 57,000 single parents by expanding eligibility for Parenting Payment (Single).
  • Responsibly increasing the base rate for eligible recipients of JobSeeker and other payments for 1.1 million people.
  • Increasing Commonwealth Rent Assistance for 1.1 million households.
  • Encouraging investment in more housing including tax breaks to boost investment in build‑to‑rent projects.
  • Delivering a 15% pay rise on award wages for aged care workers and getting wages moving again.

These measures have been welcomed by industry.

Australian Retailers Association (ARA) CEO Paul Zahra says cost-of-living relief is front of mind for everyday Australians and retailers.

“We commend the government’s relief measures in these challenging times which focus on protecting our most vulnerable people and businesses,” he says.

“Australians are rightfully keeping a close eye on cost-of-living reprieve, but so too are retailers – with discretionary spending beginning to significantly soften in the wake of inflation and consecutive interest rate rises.”

Australian Food and Grocery Council (AFGC) CEO Tanya Barden says the Budget will help Australians facing soaring living costs.

“Making it easier for Australians to support local business in these tough times is an investment in the future,” she says.

Small business support

The Budget will help small businesses with contemporary challenges, according to the Australian Small Business and Family Enterprise Ombudsman Bruce Billson.

“There’s support for small and family businesses to tackle immediate pressures, particularly with high energy input costs, an asset write-off boost to help re-equip and invest in productivity, tax administration changes that will help with vital cash flow challenges and much needed advice to deal with cyber security fears,” he says.

“Energising enterprise can deliver a stronger economy and these measures are a step towards delivering that.”

Mr Billson points to the following initiatives:

  • $325 to be deducted from the power bills of one million eligible small businesses as part of cost-of-living relief package, with additional relief in some states.
  • A temporary increase in the instant asset write-off threshold to $20,000 on a per asset basis for 12 months from 1 July for eligible small businesses.
  • A tax incentive worth up to $20,000 to provide an additional 20% depreciation for eligible assets that support electrification and more efficient use of energy.
  • $23.4 million over three years for the cyber wardens program delivered by the Council of Small Business Organisations Australia to support small businesses to build in-house capability to protect against cyber threats.
  • Reducing the PAYG and GST uplift from 12% to 6% for 2023-24 income year, to assist cash flow.
  • Extra funding for the Tax Office for modest tax administration improvements such as expanded assistance and internal review options and extending the period for small businesses to amend their income tax returns from two to four years.
  • $18.1 million for the Department of Finance to improve ability for SMEs to compete for government procurement, including improving AusTender to increase transparency and establish a supplier portal for panels.
  • Support for small enterprises to adopt artificial intelligence technologies to improve business processes and increase competitiveness.
  • $392.4 million over four years to establish the Industry Growth Program to support Australian SMEs and startups to commercialise their ideas and grow their operations with funds redirected from the Entrepreneurs’ Program.
  • The ACCC establishing a complaints mechanism for small business advocacy groups to raise systemic issues.

Commenting further, Mr Zahra says the ARA commends the government on some “smart and timely” measures for small business.

“These include the continuation of the $20,000 instant asset write-off, energy bill relief and the new Small Business Energy Incentive to encourage investments in energy efficiency and electrification, to reduce costs and emissions in the long-term,” he says.

“The Small Business Energy Incentive will have positive impacts for retailers and the environment and was advocated for by the ARA pre-budget.”

Ms Barden also highlights the Small Business Energy Incentive, noting that it has the potential to “help small and medium food and grocery manufacturers invest in upgraded, energy-saving plant and equipment”.

Mr Zahra, however, acknowledges that “we’re ultimately experiencing a crisis in the cost of doing business, and small businesses are bearing the brunt of this”.

“Energy costs are just one of the higher costs of inputs that businesses are currently managing. Businesses need more support managing higher labour, leasing and supply chain costs as well as insurance,” he says.

The ARA also welcomes the government’s establishment of the Industry Growth Program, to support Australian SMEs and startups to commercialise their ideas and grow their operations.

“Retail is one of our most dynamic environments, so this will help put some exciting new ventures on the map,” says Mr Zahra. “We’re also optimistic about the potential for existing small businesses to share in this funding.”

Further comments

The reforms flagged to streamline and simplify Australia’s migration system to offer long-term pathways to residency for skilled workers are being welcomed by the retail community, says Mr Zahra. He believes the proposed migration overhaul will help address labour and skills shortages across the sector.

“The red tape of Australia’s migration system and the barrier of expensive childcare are two leading drivers of high job vacancies,” he says. “We are pleased to see the commitment to cut the cost of childcare for 1.2 million families – together these measures will have enormous benefits for retail and the broader economy.”

In addition, Mr Zahra says the increases to JobSeeker, the changes for single parents and the 15% increase in wages for Australia’s aged care workers will be welcome relief for vulnerable Australians, with flow-on benefits for the retail sector.

Mr Billson adds that it’s disappointing to see a reduction in support for the “underpromoted” Self-Employment Assistance Small Business Coaching program and the Entrepreneurship Facilitators Program.

“These programs have low awareness and can help with the success and durability of many of the 1.6 million Australians who derive their livelihoods from self-employment and make a vital contribution to the economy,” he says.

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