Solid foundations for SME recovery in post-COVID era: COSBOA
COSBOA believes that the 2021-22 Federal Budget provides the sound foundations needed for SME business owners to rebuild their businesses and grow jobs in the wake of the economic damage wrought by the COVID-19 pandemic.
This budget delivers substantial benefits for small business owners in five key areas, namely: business tax relief, simplifying compliance with Australia’s IR laws, encouraging continued investment in digital commerce, creating a national agency to accelerate recovery from ever-frequent natural disasters, and cutting the cost of childcare.
1. Business tax relief for most small business owners
This budget includes a reduction in the SME Company Tax rate from 27.5% to 25% from 1 July 2021. Additional measures include the extension of the Instant Asset Write-Off provisions to 30 June 2023 and a 1-year extension of the temporary loss carry back to include the 2022-2023 financial year.
These tax relief measures for small business are very welcome as they will allow SMEs to keep more of the money they earn as they seek to rebuild their cashflow reserves after the destruction caused by the pandemic.
But it is a little disappointing that these budget tax relief measures do not extend to sole trader businesses, particularly the significant number of sole trader businesses that employ staff. We would have rated this budget an 8.5/10 had the Government not left out sole traders.
2. Simplifying compliance with Australia’s IR laws
Australia’s industrial relations system is a minefield for small businesses. It has become complex and is a never-ending source of stress for businesses owners, creating a disincentive to employ new staff.
The $134.6M investment in deregulation includes an investment in a new reg tech system to simplify IR compliance which is both welcome and overdue.
We look forward to working with the Morrison Government to maximise the value of this much-needed investment in IR compliance to ensure it provides tangible value to Australia’s 2 million plus small business owners.
3. Supporting SME investment in Digital
Prior to the pandemic, investment in digital services and systems was not a high priority for Australia’s small business owners.
The pandemic physically removed customers from our shops and so we had to quickly pivot to connect with them digitally.
The new funding to support small business investment in building their new-found digital capability and skills is very positive.
4. Supporting the timely recovery of SMEs for future natural disasters and pandemics
Over the last 18 months, Australian communities – and the local businesses that support them – have been hit by floods, bushfires, ice storms, a global pandemic, and floods.
While the first response of the nation’s emergency services has been outstanding, one of the more disappointing aspects has been the delay in the provision of the financial and other support from government agencies to small businesses.
Our hope is that the substantial funding announced for new National Recovery and Resilience Agency announced in this budget will resolve this issue.
While the announcement of this funding is a positive step, we hope that the Morrison Government ensures that the experiences of SMEs in the wake of the national disasters are captured in the design of the processes and systems to be developed for this vitally important agency.
5. Measures to cut the cost of childcare, giving women entrepreneurs more time to focus on their businesses
The high cost of childcare provides a barrier to many women – on whom the burden of at-home childcare still disproportionately falls even in the modern era – focussing on their careers.
Lowering the cost of childcare will give women entrepreneurs more time and freedom to focus on running and growing their businesses. This budget measure provides a powerful impetus to economic growth as Australia rebuilds its economy post COVID-19.
This is a positive budget for small business. The potential value of these five measures will only be realised if the various agencies charged with their implementation work closely with the small business community.
COSBOA and its members are up for this challenge and look forward to working with the Morrison Government to build on the very positive foundations that have been set out in this budget.
Peter Strong became the CEO of the Council of Small Business of Australia in June 2010. The role involves advocacy for the Small Business community and lobbying politicians and government agencies.
