Overall reaction to the 2018 budget was positive, with lots of information and incentives for the SME community to digest and little in the way of nasty surprises.
Here is some reaction from the business community about the measures announced and what they are likely to mean for enterprises on the ground:
Sam Allert, managing director ANZ, Reckon
Threat to research and development
“Any further tax relief for small businesses is always welcomed, as it means they would have more resources to create jobs, expand, and purchase technology and equipment to boost productivity. The $20,000 instant asset write-off is evidently a worthwhile incentive, so it’s promising to see the government extended the initiative. As a next step, it should ideally be enshrined in permanency.
“[However] it’s disappointing to see that the government has decided to restructure the R&D Tax Incentive. This will have huge implications on many Australian small businesses that rely heavily on the tax concession to drive research, development and innovation, as well as start-ups who do not have the capacity to work on projects with a substantial R&D spend above industry peers.
“Along with these changes, the ATO will now be able to publicly disclose those who requested R&D relief and what the relief was for, as well as impose a limit on time extensions to complete R&D registrations and amendments to technical provisions. These changes could jeopardise Australia’s goal of becoming the region’s innovation hub, as more businesses are forced to set up their R&D bases in countries with more supportive government initiatives and funding.”
John Brazzale, national chair, Pitcher Partners
Complex budget a missed opportunity
“As with every budget, there are winners and losers, but for business, increased complexity increases the cost of doing business. A range of confusing changes, from limits on R&D tax offsets to integrity measures targeted at property developers, could leave businesses wanting answers rather than tax cuts.
“Yet again there is no appetite for structural tax reform because the government is not confident of its mandate to successfully legislate changes. We are still much too reliant on income tax to sustain our position — there is no expansion of GST or other broader based taxes despite the retention of state-based taxes such as payroll, stamp duty and land tax that weigh on businesses.
“Absent from the budget is the constructive investment needed to help Australia transform to a digital- and technology-based economy.”
Jonathan Cartledge, head of public affairs, Green Building Council of Australia (GBCA)
Congestion busting but not environmentally friendly
“The attention on urban congestion hot spots backed by $1 billion in funding is particularly welcome and should be part of a broader strategy to support better urban design outcomes.
“The new Major Projects Business Case Fund is a welcome step towards fast-tracking future infrastructure investment and we would expect it to complement Infrastructure Australia’s work identifying priority projects. Within these business cases we must prioritise the evaluation of environmental and social benefits alongside economic returns.
“It’s encouraging to see funding coming online to support the City Deals and progress in implementing the significant housing affordability budget measures announced last year.
“However, the budget is largely silent on funding additional measures to help Australia meet our international emissions reduction targets and maintain our world-leading position on sustainability in the built environment.
Andrew Conway, CEO, Institute of Public Accountants (IPA)
Dodged a bullet on expense deductions
“We are pleased that the government has not taken away the right of individual taxpayers to claim legitimate work-related expenses. Improving education and guidance materials in response to overclaiming is also welcomed.
“Taxpayers should consider themselves lucky indeed that that the government has retained the current framework for determining entitlement to claim expenses related to work.
“Australia has one of most generous tax regimes when it comes to claiming work-related deductions. Other countries have either removed this entitlement, or have stricter eligibility requirements or alternatively introduced a standard deduction regime.”
Robbie Cooke, CEO, Tyro
A good start — but where is the action on payment terms?
“SMEs are the backbone of the Australian economy — they account for 33 per cent of Australia’s GDP, employ over 40 per cent of Australia’s workforce, and pay around 12 per cent of total company tax revenue. For this reason, it’s important SMEs are front and centre of business policy making in Australia.
“The 2018–19 budget made some positive advances in this area and overall it was very encouraging to see the Treasurer highlight the importance of the small business community early on in his speech.
“Beyond the budget measures, one area of policy making we would like to see addressed in the coming year is the payment terms between SMEs and big business. Cash flow remains one of the greatest challenges for SMEs.
“This is an area that has already been addressed by government around its own payment terms for SMEs — in late 2017, the government announced its decision to pay invoices in 20 days to help small businesses improve their cash flow. We would like to see this policy and appropriate penalties now extended to big business as it has overseas.”
Peter Croft, Asia Pacific managing director, Tribal Group
Financial commitment not necessarily active support
“[We welcome] the increase in research funding for the higher sector, specifically Melbourne University’s Synchrotron and the [Integrated] Marine Observing System at the [University] of Tasmania under the National Collaborative Research Infrastructure Strategy. We also welcome the focus on regional programs to support regional universities and the continuation of funding for research block grants and the commitment by the Federal Government to improving the systems to ensure compliance with the VET Student Loans program.
“However, we are disappointed that there has been no new commitment of funding for the VET sector, although we recognise the continuation of the Skilling Australians Fund arrangements. We encourage the federal and state governments to do more to work collaboratively to make the National Partnership Program work.
“So far, none of the $1.5 billion commitment has been taken up, though it is a good sign that the federal government has committed an additional $50 million for any state which signs on to the program by June 7.”
Dante De Gori, CEO, Financial Planning Association
Minor adjustments rather than sweeping reforms
“Offering relief from household budget pressures allows families to imagine a future in which their financial goals are met, and may even open the door to investment.
“Introducing a Low and Middle Income Tax Offset ranging from up to $530 for an individual and up to $1,060 per family, offers household budget relief in a lump sum following a tax assessment.
“Individuals will have the choice of where to direct this windfall, be it paying critical bills or investing for the future. Financial planners would likely encourage clients to accelerate debt repayments, invest this tax saving to meet financial goals or as an additional contribution to superannuation.”
Paul Drum, head of policy, CPA Australia
Changes theoretical without parliamentary support
“The government’s seven-year personal income tax plan promises much over a new glide path similar to the ten-year enterprise tax plan. But, like the company tax cuts, the question is whether this plan will garner the support it needs to get through the parliament.
“For smaller businesses, the instant asset write-off has been extended for another year which is welcome, although it would be preferable that this measure be made a permanent feature of the tax system to help small businesses with their planning.”
Sassoon Grigorian, head of public policy, Salesforce
Industry has responsibility to follow government investment
“The government is making a move in the right direction, with the commitment to a 10 year plan to increase female involvement in STEM education and careers.
“Industry has a responsibility to back the government’s focus on female participation in STEM and invest in programs which will move the needle. We’re calling for more technology businesses to engage with the education system and support the formulation of the 10 year strategy.
“The 10-year strategy should leverage free online training platforms which allow women to gain the skills needed to access the technology jobs of the future.”
John Hart, executive chair, Australian Chamber – Tourism
Modest support for local tourism
“The federal government has recognised that tourism is a major jobs generator particularly in regional Australia by providing $45 million to improve tourism-related infrastructure, supporting demand driven projects that ensure the benefits of government investment can be multiplied across the tourism sector in the regions.”
“It was also pleasing to see that the Government is willing to tackle the inequity in relation to the application of the GST that has existed between hotel rooms sold on overseas internet sites and hotel rooms purchased locally.
“Previously both Australians and international tourists purchasing on internet sites based overseas were not paying GST, whereas if they purchased them locally they were charged the GST.”
Sarah Moran, CEO and co-founder, Girl Geek Academy
A welcome boost for women in STEM education
“I’m particularly interested in the announcement that the budget has allocated $4.5 million over four years to boost women’s participation in STEM education and industry, along with the appointment of a Women-in-Science ambassador.
“Acknowledging this gender gap in the STEM industry is a huge leap towards creating more equality in the classrooms and workplace, which is critical if we expect to be building world-class products that reflect an actual society's needs, and not just a subsection of this.
“Sadly, in contrast to this, the announcement that the ABC’s annual funding will be frozen for three years is disappointing as this is a key platform where people can learn about science outside the classroom.”
Rafael Moyano, CEO Australia, The Adecco Group
“It is disappointing to see that the proposed business tax cuts for larger companies couldn’t come into fruition in time for the Budget. Australia has always been known for its high tax rate, which is a massive deterrence for organisations looking to set up shop here. When compared to the world’s most powerful financial centres — the US at 21 per cent, the UK at 19 per cent, Singapore at 17 per cent and Hong Kong at 16.5 per cent — a lot more can be done.
“It’s disappointing that the minimum wage debate wasn’t addressed during the budget. More can definitely be done to support minimum wage earners, who remain the most vulnerable segment of the economy, so their salaries reflect inflation and current living standards.
“The issue of youth employment was left untouched during the budget. Australia's youth unemployment rate sits at a staggering 13 per cent — compared to 8.5 per cent in the US, 4.5 per cent in Singapore, 3.8 per cent in Japan. Despite creating almost one million jobs in the past five years, amid 20 years of overall economic growth, youth unemployment shows no signs of abating.”
James Pearson: CEO, Australian Chamber of Commerce and Industry
More needs to be done
“Overall this is a positive budget — but it leaves Australia more exposed than we would like to any deterioration in the global economic environment.
“It underlines the need to encourage the business community to invest, create wealth, and employ — in order to provide the stable foundations for the economic growth on which the budget forecasts depend.”
Mark Sinclair, ANZ regional director, WatchGuard Technologies
Great investment in business cyber security
“It is great to see the federal government continuing with its commitment to shoring up the country’s cyber security defence. The investment announced last night also reinforces last year’s budget commitment in its Cyber Security Small Business program to provide $2,100 co-funding for small businesses to have their cyber security tested.
“However, what’s really needed is for this specific program to actually get kicked off. Given that most Australians today work in small businesses, the government should also take it a step further and assist small businesses with the cost of making their networks more secure. Testing is one thing, but remediation of any security vulnerabilities will often cost a lot more.
“Given the growing complexity and distribution of networks, small businesses often can’t afford the complete and appropriate security solutions that large enterprises are investing in today.”
Denita Wawn, CEO, Master Builders Australia
Budget building future prosperity
“Building and construction investment is a major driver of the improvement in the budget position.
“The government’s infrastructure budget will play a key role in setting the nation up for future prosperity. The additional $24 billion investment in infrastructure across the country will boost the productivity and livability of our cities.”
Jennifer Westacott, chief executive, Business Council of Australia
Business tax cuts sorely missed
“This budget is proof that when business activity grows, when you get the settings right and the economy grows, tax revenues go up too.
“It was 30 years ago that the Hawke Labor government cut the company tax rate from 49 per cent to 39 per cent to turbo-charge economic activity and it contributed to a 50 per cent increase in company tax revenues.
“It is time to end the nonsense that economic growth is at odds with fairness. The exact opposite is true. We cannot have a fairer society with a weaker business community and a sluggish economy.”