The Federal Government’s first annual May Budget for 2023-24 has the industry talking – this is what the PVCA, COSOA and Ai Group have had to say.

PVCA

“The budget rhetoric of treasurer Chalmers was an interesting story. It strikes a calculated balance of fiscal repair against cost of living relief. Although a $4.2 billion budget surplus was announced for this budget, the government has transparently admitted that surplus is short-term and will move back into its structural negative territory in the coming years,” the Print and Visual Communication Association (PVCA) general manager of IR, policy and governance Charles Watson said.

“Much of the tax windfalls that have assisted in creating a short-term surplus have been allocated to paying off government debt is not an unwise move. Realistically, the budget won’t likely move out of deficit until towards the end of the decade. The government’s claim that this budget wont adversely contribute to inflation remains to be seen.

“Leading into this budget, the PVCA was seeking various measures to be addressed by government. These included a further extension, or better yet permanency, of the instant asset write-off scheme, business investment and incentivisation measures, along with greater support for improved educational and training outcomes. These were only partially addressed in this year’s budget.

“From an industry perspective, there is not much in this budget for businesses for the longer-term. There is some level of recognition for the needs of small business in this budget, and some of the budgetary allocations may benefit SMEs.

“The $20K asset write off is welcomed, but won’t buy much of an asset. However the $20K threshold does operate on a per-asset basis and may improve cash flow for some small businesses and lower accounting costs of managing a depreciating asset.

“SMEs may also be eligible for up to $650 support for power bill relief, but it’s a one-off and the amount will depend upon the particular state agreement made with the Commonwealth.”

A budget synopsis and review is expected to be released to PVCA members today.

COSOA

“Small businesses play a vital role in the Australian economy, employing millions and generating income for countless individuals and business owners. A healthy small business environment is essential for a vibrant and thriving community. The 2023-24 Federal Budget acknowledges small business, but there is a need for greater focus on empowering them, promoting entrepreneurship and providing enhanced reasons to commence and remain in business,” the Council of Small Business Organisations Australia (COSOA) said in an overview, adding that in the short-term it sees initiatives to support the cost of doing business, while in the longer-term it sees the beginning of infrastructure improvement.

COSOA expressed concerns around the previously announced three-year transition to payday super, saying it has to be thoroughly considered with appropriate funding of the technology changes together with the modernisation of the Superannuation Guarantee legislation.

“This is not a no-cost proposal and it is not a ‘just push the button’ solution. A better, efficient, more correct solution for small business would be a move to monthly payments,” it said.

In looking to the future, COSOA said, “To ensure that small businesses in Australia are not left behind and continue to thrive, it is essential that government continue its collaboration with industry associations who represent small and micro business.

“By working hand-in-hand with industry associations, the government can gain a deeper understanding of the challenges and opportunities that small businesses face, ensuring the development of targeted solutions.

“Moreover, these partnerships will help identify and address skills gaps and emerging workforce trends, which will be crucial for the growth and success of small businesses in the rapidly evolving global economy.”

Ai Group

While fiscally prudent, this year’s Federal Budget unfortunately lacks the urgency and imagination required to power the Australian economy through a period of anaemic growth, according to national employer association Ai Group CEO Innes Willox said.

“It offers little to kickstart the structural reforms needed to boost productivity, investment, innovation, job creation and sustainable real incomes growth,” he said.

“The Government has used its one-off surplus, driven by elevated commodity prices, the strong labour market and fiscal drag, to pay off debt and reduce future interest payments. It has prioritised household-based subsidies and handouts rather than focusing on productivity improvements to lift the economy out of its long-term productivity malaise.

“While they have been designed to lessen the direct inflationary impact, these band-aids and sugar hits also fail to address the underlying causes of the problems that they are trying to solve around housing shortages and underlying energy costs.

“The announcements around improving Australia’s skills base are the major positive, including the prospect of $3.7 billion in additional funding for vocational education and training, assuming a National Skills Agreement can be struck.

“This will be essential in building a TAFE system fit-for-purpose to meet the demand for additional TAFE places the government hopes to create. The focus on increasing the basic language, literacy and numeracy skills that Australian industry reports is holding them back is also welcome.   

“The focus on skilled migration remaining the core of our national migration program of 190,000 migration places is also welcome as industry seeks to fill growing skills gaps across our economy.   

“Among the disappointments for business is the lack of focus on improving productivity, as well as relative lack of attention given to the needs of business itself. The government’s much-touted $15 billion National Reconstruction Fund receives seed funding of only $550 million this year, almost stalling it at the starting line. This represents 3.6 per cent of the promised total NRF funding.   

“A new Industry Growth Program is a cut-down, half-funded, government-run version of the existing Entrepreneurs’ Program, which has provided support for smaller businesses to strategically plan for growth and expansion. Government-run programs providing direct support for business rarely achieve their objectives.   

“A significant cut of $61 million to the Export Market Development Grant scheme is deeply unfortunate given that successful smaller Australian businesses are increasingly seeking new export markets to drive their expansion and growth.

“At a macro-level, there is a welcome improvement in the gross debt and interest repayment position and improved revenue projections which provides the government with more head room in future budgets.  

“The Government assumes a further compression of wages, meaning over time, there will be less incentive for workers to develop their skills.   

“The Budget includes a lot of measures with insufficient explanation or detail. Among these are what the government intends to do with $2 billion it has allocated in the future to ‘buying hydrogen contracts’ and the $75 million it has allocated for a National Artificial Intelligence Centre and associated programs.   

“Overall, the Budget does not seek to cure the fundamental problems that Australian businesses and the economy face. While it reduces debt, the focus on short-term household relief will not provide the productivity growth we need now and the jobs we need for the future.”

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