This year’s federal budget includes a host of initiatives to help small business:
- Tax incentives to encourage spending on business assets.
- Nation-building infrastructure programs to drive productivity.
- Investment in manufacturing and research and development.
What’s in the budget?
The 2020 federal budget, which was handed down in October this year rather than announced on its usual date on the first Tuesday in May, has outlined a huge program of initiatives that will buoy economic growth through the COVID-19 period and long into the future.
But these nation-building, COVID-busting plans come at a cost. The budget papers show the deficit will reach $213.7 billion this year, before falling to $66.9 billion by the 2023/24 financial year. On top of this, net debt will reach $703 billion or 36 per cent of GDP this year and peak at $966 billion or 44 per cent of GDP in June 2024.
Additionally, economic growth is expected to drop by 3.75 per cent in 2020. But expect a stunning about-face in 2021 when Treasury expects the economy to grow by 4.25 per cent. To achieve this turnaround, at this year’s federal budget the government revealed a comprehensive plan to put the economy back on the path to growth. Jobs creation and progams to boost consumer and business confidence are at the heart of its plans. Once economic growth is back on track, the Coalition will commence measures to get the budget back into surplus.
Technology boost for small business
Intuit QuickBooks customers will be pleased to note the federal governments has allocated $800 million to improve access to digital services for businesses. This includes $420 million to accelerate the government’s plans to create a single business registry and remove more red tape, and $22.2 million to help small business owners take advantage of digital technologies, which can increase productivity and automate simple tasks, and more easily access government support, such as JobKeeper payments.
Smart tax incentives to support small business
The federal government’s plan to assist small businesses centres on tax incentives to get firms spending and drive their growth. It includes:
- New rules that allow businesses with annual revenue of up to $5 billion to write off the cost of any eligible asset until June 2022. Treasury estimates to 99 per cent of all Australian businesses will be able to use this incentive, which should lift productivity, drive investment in new plant and equipment and support economic growth.
- Carry-back provisions that allow businesses to offset losses made until June 2022 against profits made in or after the 2018/19 financial year.
Intuit QuickBooks Australia Country Manager, Natira Drayton notes the immediate impact of tax cuts will encourage businesses to spend.
“We welcome the loss carry-back provision to boost cash flow, which will be an important lifeline for businesses struggling temporarily because of the pandemic’s impact. We know from our research cash flow is the biggest pain point for small businesses, so the impact of this policy cannot be under-estimated,” she said.
Drayton also noted businesses will benefit from the Prime Minister’s pre-Budget announcement regarding mandating the adoption of electronic invoicing by 1 July 2022 for all Commonwealth government agencies.
“E-invoicing has the potential to significantly improve payment times for small businesses and reduce the friction of manually entering, scanning, printing or posting invoices. The announcement will encourage greater adoption among businesses supplying to the government and within their supply chains.”
Push to kick-start manufacturing and infrastructure investment
At this year’s budget the federal government outlined a solid range of programs to boost manufacturing, on top of a huge number of nation-building infrastructure initiatives.
The centrepiece is a $1.3 billion Modern Manufacturing plan focused on driving growth in the following industry sectors:
- Food and beverage manufacturing.
- Medical products.
- Recycling and clean energy.
- Resources technology and critical minerals processing.
- Space industry.
The federal government has also expanded its 10-year infrastructure pipeline, including an extra $14 billion for new and accelerated infrastructure projects, which will create 40,000 jobs. On top of this, $7.5 billion has been allocatedfor national transport infrastructure projects, such as $2 billion in road safety upgrades and $1 billion local councils road upgrades.
Major projects include:
- The Singleton Bypass and Bolivia Hill Upgrade in New South Wales.
- The upgrade of the Shepparton and Warrnambool Rail Lines in Victoria.
- The Coomera Connector in Queensland.
- The Wheatbelt Secondary Freight Network in Western Australia.
- The Main South Road Duplication in South Australia.
- The Tasman Bridge Upgrade in Tasmania.
- The Carpentaria Highway Upgrades in the Northern Territory.
- The Molonglo River Bridge in the Australian Capital Territory.
The federal government has also committed more money for research and development, including:
- $1.9 billion for low emission and renewable technologies.
- $1 billion for university research.
- $459 million in extra funding for the CSIRO.
These projects will have myriad benefits for small business:
- A more efficient roads and rail network will help boost productivity.
- They will provide work for smaller firms in the infrastructure, engineering and consulting sectors.
The funding set aside for these project is on top of $11.3 billion already allocated to infrastructure in response to the COVID-19 pandemic.
Regional recovery a priority
Businesses in rural and regional areas were not forgotten. Some of the projects the government is backing include:
- $2 billion in loans for farmers to recover from the drought.
- $350 million to attract domestic tourists to regional areas.
- $317 million for exporters to access global supply chains.
Not only will these projects help lift Australia out of its COVID-19 recession, they will also provide the foundation for long-term economic growth and an exciting future for the small businesses on which this nation is built.