What do SMEs want most?
In a straw poll conducted between 18 March and budget night (2 April) on the My Business site, readers were asked the question, “Regardless of who wins the federal election, what single thing could the next government do support your business?”, with six options to choose from.
The 208 respondents were split on which measure would best support their business, but three stood out as being the most crucial for either major party to win their support.
At the top of the wish list was business tax cuts, with 28.4 per cent stipulating this as their most desired form of government support.
But other types of support were not directly related to finances. Businesses are crying out for simplification of the regulations strangling them: 26 per cent called for simplification of the Fair Work Act, and a further 25.5 per cent want a reduction of red tape more generally.
Of the remaining respondents to the poll, almost one in 10 (9.6 per cent) want to see government support for new growth opportunities, 6.7 per cent want to see unfair contracts formally banned. Just 3.8 per cent said that standardising payment terms would be of most benefit to their business.
Did they get it?
For the most part, yes.
Tax cuts formed the centrepiece of Treasurer Josh Frydenberg’s first budget. The government committed to “fast-tracking” cuts to the rate at which small business tax is charged, taking it to 25 per cent by the 2022 financial year.
In the budget, it also promised to deliver both immediate and longer-term cuts to personal income tax rates, the latter to be achieved by structural reforms to tax bands.
Labor has already revealed that it, too, plans to introduce tax cuts, more details of which are expected in its impending budget reply.
Unfair contracts are also set to go. As revealed before the budget was handed down, both the government and the opposition have pledged to ban unfair contract terms in standard form contracts used between large businesses and SMEs, with hefty penalties attached for multinationals and large companies that fail to comply.
There was also growth assistance announced in the budget. The headline measure came in the form of an expanded instant asset write-off, which for the first time would be made eligible to businesses with annual turnover of up to $50 million (up from the current $10 million), for assets worth up to $30,000.
This measure will be available for all business assets purchased within a tax year up to that value.
And a further $60 million was pledged to support businesses seeking to export.
Regulation a sticking point
Arguably the biggest downside for SMEs to come out of the budget relates to red tape and regulation. Under the budget, additional regulatory requirements were announced, rather than the curbs to red tape SMEs had been desperately hoping for.
Likely to be a controversial change is the proposed reform to the ABN system, with the government wanting to scrap ABNs for life and introduce new reporting measures, whereby ABN holders would have to provide income tax figures and update their details to the ATO every year.
Fair Work compliance was also outlined in the budget, with the Fair Work Ombudsman to be given $2.3 million each year on an ongoing basis to fund investigations and prosecution of sham contracts by employers.
More funds — to the tune of $4.3 million over four years — were also given to the Fair Work Commission, to appoint additional staff.
Rather than cut red tape, the budget tended to focus more on boosting support for SMEs to navigate it, such as the creation of a Small Business Taxation Division within the Administrative Appeals Tribunal, extra funding for free legal advice on employment law and a Small Business Concierge Service to provide tax-related advice and support through the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
Targeting skills shortages
Not included in the My Business poll was action to address chronic skills shortages, with the issue attracting significant investment within the budget.
The government said that it would direct $525 million to “upgrade and modernise” vocational education and training (VET).
Under this spending, employers were promised incentives worth an extra $4,000 — over and above the existing $4,000 incentives — to take on and complete new apprenticeships. Eligible occupations include carpentry, plumbing, hairdressing, airconditioning and refrigeration mechanics, bricklayers, plasterers, bakers and pastry cooks, vehicle painters, wall and floor tilers as well as arborists.
Some $62.4 million was allocated to boost language, literacy, numeracy and digital skills of adults and school leavers aged 15 to 44 years to boost their employability.
The government also announced that it would establish 10 training hubs, at a cost of $50.6 million, to facilitate better connections between employers and up to 3,000 school students over four years.
These, and other, measures would be overseen by a new National Skills Commission, which would work in conjunction with state and territory governments to develop a consistent national approach to VET.