Can Federal Budget tax breaks make everyone happy?

By Jonathan Jackson. Published at Apr 3, 2019, in Features

Federal Treasurer Josh Frydenberg brought down his Federal Budget last night to mixed reactions.

The document was mostly well-received, particularly the asset write off for SMEs.

The measure initially applied only to businesses with turnovers sub-$2 million but was raised to encompass those up to $10 million in July 2016.

The write-off allows businesses to use simplified depreciation rules and claim an immediate deduction for the business portion of each asset (new or second-hand) costing less than a threshold — previously set at $20,000.

The write-off has increased to $30,000 and is available to an estimated 220,000 additional businesses.

Businesses with turnovers up to $50 million will now be able to claim the up-front deduction, taking the total to 3.4 million Australian companies.

Every industry has put its two cents in, so let's have a look at some of the commentary surrounding the budget.

Pitcher Partners’ Michael Dundas
It’s been a hugely popular and important measure for small businesses and we have seen many only invest solely on the availability of that write-off.

To see the instant write-off extended not only in duration but in the size of the business is really welcome.

As far as a stimulus measure goes, it is targeted, tried and tested. It is well understood by business and a very effective measure for business growth.

We would dearly like to see Labor throw their support behind this announcement.

We want to give businesses confidence that they can make investment decisions now, rather than wait to see the result of the election”

Scottish Pacific CEO Peter Langham

Simplifying the complex tax system and cutting red tape, and on a state basis getting rid of payroll tax, would have the biggest daily impact for Australia’s small to medium business sector. These are the everyday impact items that will energise SMEs, encourage business investment and drive growth and innovation.

SME company tax cuts being brought forward would be welcomed by the sector, given this was the top initiative SMEs wanted to see (nominated as top priority by 27% of business owners). One in five SMEs want the newly elected government to prioritise cutting red tape by reducing their administrative and regulatory burden.

Asset write-off welcome
Almost 24% said continuing the asset write-off should be the Federal Government's top focus for SMEs.
Mr Langham said they will be delighted with the Budget's flagged increase of the instant asset write-off up to $30,000 (from $25,000) and opening this initiative up to SMEs with up to $50m turnover (an increase from $10m turnover).

$2b securitisation fund for SME access to finance
This government announcement will not have much of an impact at the coalface for business owners.
Mr Langham said SME Growth Index results showed that not quite 3% of business owners believed this should be the government's SME priority.

Business Council of Australia chief executive Jennifer Westacott:

This is a strong and responsible budget that delivers a surplus, lowers personal income taxes and invests in jobs, health, education and infrastructure, Business Council chief executive Jennifer Westacott said.

This is the payoff for the community from spending discipline and hard work.

Business has continued to do the heavy-lifting in this budget – which again is proof that when business thrives, Australia thrives.

Not everyone was happy.

Rafael Moyano, Managing Director, Modis Australia -

Innovation and R&D Tax Incentive
At a time when we should be significantly investing in Australia’s innovation system, it is a little disconcerting to see that technology has taken a backseat in the government’s agenda.

Without stability and clarification on the R&D tax incentive scheme, our industry and wider economy is at risk of stagnating. Many Australian tech companies rely on the initiative to help grow their businesses. Without dedicated financial support, it impacts our nation’s ability to support emerging innovation, propel global growth and build a favourable business environment.

Ahead of the election, we need our political leaders to champion R&D in Australia by implementing effective programs to encourage the development of pioneering products and services. In a world where technology is driving unfathomable, brilliant transformation across countless sectors, it has never been more vital for the government to prioritise the tech ecosystem. This will go a long way in fostering greater benefits for the wider Australian economy.

That said, we are pleased to see the introduction of Skill Organisations. We hope that this development of training packages for high demand skills will help in fostering a more needs based approach to skills development, particularly for disadvantaged job seekers and those starting their careers. This is a welcomed announcement, ensuring that students have a wide range of employment opportunities available, regardless of their location, access to training or advantage.

Lucy Manne, Head of Policy and Campaigns at women’s rights organisation ActionAid

Ms Manne believes it continues the Australian Government’s downward spiral when it comes to the aid budget, which is critical in supporting women to rise out of poverty and to achieve gender equality:

There is a real danger that this budget is going to make the situation worse by investing in initiatives such as the Australia Infrastructure Financing Facility for the Pacific, which has excluded women from the design and could deepen inequality.

The Government should be investing in funding local, women-led solutions to challenges faced by the region such as climate change and increased humanitarian emergencies – but it has instead slashed the aid budget for the sixth year in a row.

The so-called ‘Pacific step up’ package will siphon millions from the aid budget that should be supporting women’s rights and gender equality in the region, and put it into a rushed infrastructure facility that may undermine sustainable development outcomes.

Although the Government is touting Australians and our neighbours as winners in this budget, it has not incorporated meaningful discussions with women’s groups. Instead of demonstrating a genuine commitment to protecting women’s rights, it has delivered a disappointing Budget and a half-baked strategy for the Pacific that, to date, seems focused more on funding reality TV than on gender equality.

Yet, despite some groups' concerns, it has been a mostly positive response.

In his capacity as MD of Modis Australia (along with being CEO of Adecco) Rafael Moyano says of Vocational Education and Training:

Despite creating almost one million jobs in the past five years or so, youth unemployment in Australia shows no signs of abating. We are pleased to see a $525.3 million funding boost for vocational education and training, as well as apprenticeships, as this will certainly help alleviate and address current skills shortage and create more opportunities for young people.

With Australia experiencing a skills gap across many industries, the National Skills Commission is a step in the right direction to fostering a closer connection between industry demands and skills development. The introduction of the regional Training Hubs is also a promising initiative. This will help students in Australia’s youth unemployment hot spots complete secondary education and have an equal opportunity at success regardless of their location, whilst providing access to training in industries facing skill shortages.

Ultimately, public and private sector organisations need to work more closely together to support young Australians and better prepare them for the real world. Nations that are most successful at tackling youth unemployment are known for cultivating a holistic approach to education that not only encourages experiential and project-based learning, but provide work based training opportunities like apprenticeships.

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