Did the Budget deliver for small business?

Our research shows that a quarter (23 per cent) of small businesses are worried they won’t exist this time next year without Government support.

As Australia works to understand what the newly-announced Federal Budget means for the nation, the question on small-business owners’ mind is this – has Budget 2020 hit the bullseye for Australian small business, or has it gone wide of the mark?

Listening to small business

In the weeks leading up to the Federal Budget, Reckon surveyed 1002 Australian small-business owners across the country to find out what they wanted to see from Government.

The result was a Budget 2020 “wish list”:

  1. job creation and unemployment reduction (74  per cent)
  2. mental health support (69  per cent)
  3. personal income tax reduction (68  per cent)
  4. cashflow support (65 per cent)
  5. access to professional advice (64 per cent)
  6. upskilling and training (62 per cent)
  7. digitisation (57 per cent).

Compared to this wish list, has Budget 2020 delivered for small business?

1. Job creation and unemployment

Nearly three quarters (74 per cent) of small business owners prioritise seeing measures to create jobs and reduce unemployment.

Delivered: Budget 2020 is focused on strong, interventionist measures to drive job creation and keep unemployment low through billions of dollars in JobMaker initiatives. From the perspective of small business, the Government has hit the nail on the head with this approach.

2. Mental health

More than two thirds (69 per cent) of small businesses want the 2020 Federal Budget to address provisions for small business mental health initiatives.

Delivered: It shouldn’t be a surprise that mental wellbeing support is number two on the wish list for small businesses, given business owners have had it particularly tough in 2020. Restrictions, lockdowns and travel bans necessary for guarding community health have subjected small business owners to extraordinary levels of uncertainty and stress this year.

3. Personal income tax reduction

More than two thirds (68 per cent) of small businesses prioritise lower personal income tax rates to encourage consumer spending.

Delivered: Reduced income tax rates are small businesses’ most wanted tax-related measure for Budget 2020. Business owners want the Government to do all it can to boost consumer spending at a time when some households may be tightening the purse strings.

The announcement of tax cuts for 11 million Australians really hits the mark for small business. In

fact, small businesses would much rather see personal income tax rates lowered (68 per cent), than see reduced company taxes (35 per cent).

4. Cashflow

Two thirds (65 per cent) of small businesses prioritise seeing cashflow support from Budget 2020.

Delivered: Cashflow concerns have long been an issue for the Australian small business sector, so business owners no doubt welcome that cashflow support has been explicitly considered in this Budget.

In this context, the Government’s introduction of temporary full expensing is highly significant – it substantially reduces the after-tax cost of eligible assets, which provides a welcome cashflow benefit for small businesses.

5. Access to professional advice

Almost two thirds (64 per cent) of respondents want to see grants for small businesses to seek professional financial or business advice.

Not delivered: Accountants, bookkeepers and other professional financial advisors are Australia’s first responders when it comes to the economic impact COVID-19 has had on our nation. Advice from accredited professionals means peace of mind for small business owners who must navigate a fast-changing tax, business and regulatory landscape.

6. Upskilling and training

More than three-in-five (62 per cent) small businesses want to see Government subsidies for training and upskilling programs.

Delivered: When it comes to the vocational and trades sectors, the skills initiatives announced as part of both JobTrainer and JobMaker deliver a strong start. However, to widely address the needs of small business through the recession, we need to see extensive training and upskilling made available to small businesses across a whole host of sectors – particularly to fortify business and digital skillsets.

7. Digitisation

More than half (57 per cent) of respondents want Budget 2020 to deliver grants or incentives for small businesses to digitise.

Delivered: COVID-19 restrictions earlier in the year means we saw huge portions of Australia’s workforce and economy move into the digital space within the span of weeks. Business owners understand that this new normal is here to stay and are now looking for Government support to help them further digitise, especially given how critical digital capacity is in modern business operations.

Sam Allert, CEO, Reckon Group

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