With the Federal Election on 21 May 2022 dominating newsfeeds across Australia and the result too close to call, both parties are making a play for the small business vote.
But before we dive into the goodies both parties are offering the electorate, some economists are suggesting the change of government will have little impact on the economy, interest rates or the housing market. Shane Oliver, Head of Investment Strategy & Chief Economist at AMP says, “Unlike in 2019 when the ALP’s policy was to limit negative gearing and raise capital gains tax, which modelling indicated could reduce property prices by 2% to 9%, this time around the policy differences with respect to property between the ALP and the Coalition are minor.”
According to Shane, both sides are seeking to repair the budget through economic growth rather than austerity. “Neither side is proposing a significant reform agenda in key areas like tax, education, industrial relations, and housing affordability. With the exception of climate policy where the ALP is more aggressive, it’s hard to see a big impact on markets. Interestingly whether the RBA hikes in May or waits till after the election in June, interest rates will likely be a hot topic through the election campaign.”
Focus on small business
Where the parties seem to have a greater emphasis is in wooing the small business vote. In a keynote speech at the Council of Small Business Australia’s National Small Business Summit in April, Stuart Robert MP, Minister for Small and Family Business[i], said, “This sector is critical to the health and vitality of Australian society, and the work you collectively do is critical to the success of the sector.”
The Morrison Government, with the relevant state Governments, has announced $1.7 billion of support to New South Wales and over $1.35 billion to Queensland to rebuild after the floods.
This support includes measures for small businesses such as:
- $50,000 small business and not-for-profit grants and $75,000 primary producer grants;
- $7 million to expand the Commonwealth’s business recovery and resilience service into at least 30 of the most flood-affected regions of northern New South Wales and south-eastern Queensland; and
- $800,000 to provide free and independent case managed financial counselling to flood-affected small businesses through the Rural Financial Counselling Service under an extension of the Regional Small Business Support Program.
Cost of doing business pressures
While the cost of living pressure is the hot topic, the Coalition has its eyes laser-focused on the cost of doing business.
Fuel prices across the country are coming down. In the March Federal Budget, the government slashed 22 cents from the fuel excise for six months, and already this move is having an impact. Minister Roberts said, “This will go a long way to ease the pressure felt by you and your businesses and families, but we also expect this to have an impact right across the supply chain.”
The Morrison Government has also pledged to make energy supply more secure, affordable, and reliable for businesses as record levels of renewables hit the grid. The government is also providing $1.6 billion in tax relief to support more than 3.6 million small businesses to increase their digital uptake and skills capabilities through a bonus 20% deduction. “This is a big deal and will go a long way to modernising Australia’s small businesses,” Minister Roberts said.
The digital upskilling of Australia’s small businesses will be supported through the government’s broader $550 million Skills and Training Boost. Small businesses will be able to claim a bonus 20 per cent deduction for the cost of external training courses until 30 June 2024 – for every hundred dollars a small business spends on training their employees. They will get a $120 tax deduction.
Likewise, through the $1 billion Technology Investment Boost, small businesses will be able to claim a bonus 20% deduction for digital-related expenses and depreciating assets, up to $100,000 per year, until June 2023. So, for every hundred dollars small businesses spend on digital technologies like cloud computing, e-invoicing, cyber security and web design, they will get a $120 tax deduction.
The ALP pitch to small business
The Federal Opposition agrees that small business is the backbone of the Australian economy but argues the sector has been taken for granted for too long[ii]. Labor will:
- Ensure small businesses are paid on time to sustain growth across the economy with a mechanism to ensure payment within 30-days. According to Labour, the current average contract payment time sits at 37 days above the 30-day benchmark.
- Drive a genuine collaboration with small businesses and the government to reduce the time small businesses spend doing taxes, cut paperwork and target support. Eight out of 10 small businesses find government regulation overly complex.
- Reduce small business transaction costs at the point of payment with a clear timeline for implementing least-cost routing or similar. Small businesses are disproportionately impacted by higher transaction fees that eat into profits – around $804 million a year.
Labor also plans to maximise small business participation in Commonwealth procurement, providing more significant opportunities for business and Australian jobs. The Commonwealth can use its $190 billion purchasing power to support small businesses, deliver better value for money and grow the local economy.
Other promises made by Labor include providing fee-free TAFE courses to address skills shortages and cheaper childcare to remove barriers to returning to work.
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