Small businesses have been buffeted by the pandemic, inflation and shipping woes. The Morrison government plans to release the Federal Budget on March 29, just before the May election.
Over two million Australian small businesses and sole traders will benefit from the upcoming federal budget. The budget is crucial because it will shape the economy during a period of unprecedented economic headwinds caused by the Ukraine war, the still-lingering Covid-19 pandemic, and natural disasters.
We were curious to know what business leaders thought would be the most important in this year’s budget for businesses.
We asked three questions to learn more about their perspectives on the budget, what it should be for businesses and the general population, and the big picture.
Joe Donnachie, Supply Chain Finance Manager at Octet
What are the three most important sectors for business in the upcoming budget that require the most attention?
“With Treasurer Josh Frydenberg set to announce an $800m boost for small businesses as part of the 2022 budget, the business sectors that are most likely to benefit include those that are more labour intensive, as the government plans to bring the unemployment rate below 4 per cent.
“For example, hospitality, construction, retail and healthcare sectors will be amongst the biggest beneficiaries, given the focus around streamlining tax compliance and reporting, and cash flow support to invest in innovation and job growth.”
How will this year’s Federal Budget contribute to Australia’s economic recovery and job creation in the run-up to the Federal Election?
“As approximately 2 million SMEs and sole traders will effectively be provided with relief in the upcoming federal budget, approximately $1.85bn in cash flow relief is to be distributed, which averages around $800 per/business.”
“This additional cash flow will ultimately assist with upskilling staff and recruitment, in a high-vacancy environment, which has almost been devoid of any meaningful immigration over the last 2 years.”
What does the Budget mean for Australian businesses and the general public this year?
“Given the dramatic backdrop of COVID, global supply chain disruptions, the rising cost of both goods and labour, and of course Russia’s invasion of Ukraine, this year’s federal budget is of critical importance to Aussie SMEs and inherently the general public.
“The previous low-interest-rate environment has been conducive to rising house prices and the SME market enjoying record-low borrowing costs, but with extreme inflationary pressures likely triggering multiple interest rate increases in the coming year, many will be looking to the federal budget for support around the increasing cost of living, skill shortages and tax relief.”
Michael Judge, Head of Australia and New Zealand, OFX
What are the three most important sectors for business in the upcoming budget that require the most attention?
“RE: Budget. A of couple things have already been revealed by the Treasurer.
“Tailwind: Australia is the net exporter of energy. Higher prices will have a materially beneficial impact on our current account and national income. With commodity, oil, coal and gas prices rising a smaller than expected budget deficit is expected. At a national level, this is a net positive.
“With unemployment currently at a record low of 4.2 per cent, we are already seeing a rise in real/actual wages. Heightened wage growth will further enhance the associated tax receipts/national income side of the budget.
“We still remain deep in the red (by way of deficit). Pandemic forced measures, unprecedented natural disaster funding has been the driving force behind a mountain of debt. It will be smaller than expected deficit, but a deficit nonetheless.”
“Headwind: Higher energy prices have already started to translate into pain for Australian consumers at the fuel bowser. Coupled with the cyclical inflationary pressures that the covid environment has delivered, both facets heighten the risk of higher rates arriving sooner.”
How will this year’s Federal Budget contribute to Australia’s economic recovery and job creation in the run-up to the Federal election?
“It will be a fine balance between producing an accommodative budget to support households who are confronted by higher prices whilst controlling the expected rise of interest rates.
“The risk / path-off will be to address high prices without derailing the underlying good health of the national economy. By using the fiscal lever (vs the interest rate stick) to address higher prices, this will benefit highly indebted households in particular.”
What does the Budget mean for Australian businesses and the general public this year?
“How the budget could play a role in supporting households:
- Cut the fuel excise to address fuel price rises.
- Continue to offer mid-low income earners a one-off lump sum payment of $1060
- Childcare subsidiaries to be bought forward
How the budget could play a role in Support for businesses:
- No hearty or transformative changes to taxation rules are expected.
- Pandemic-related support mechanisms are expected to remain in play.
Finally, we’re reminded that it is an election year, more money will be spent than what we’d expect otherwise.”
Alok Kulkarni, CEO of Cyara
What are the three most important sectors for business in the upcoming budget that require the most attention?
Creating the Great Silicon Reef
“Australia has had several successful start-ups that have scaled on a global level, but much more needs to be done to nurture the next generation of Australian innovators and entrepreneurs. This begins with a change in mindset. We must view Australia as a hub for technology creators, as opposed to technology adopters.
“More government investment into Australia’s start-up ecosystem has the potential to spawn the next round of innovations, just like it did in Silicon Valley. Now’s the time to invest in the Great Silicon Reef.
“This type of funding would support the creation of incubation centres where companies can work when they first launch, enabling them to share ideas and thrive in their early stages. The government’s R&D tax incentive should also be reviewed and revised as not all R&D starts from scratch.
“There are many companies that build on and evolve existing innovations, but these are not included in the current incentive. Instead of limiting government support to new innovations only, it should expand the scope and allow greater flexibility.”
Cultivating a STEM workforce
“While the Federal Government has financially supported the creation of a skilled workforce, much more needs to be done to cultivate a STEM workforce. We saw Australia’s tech industry crippled by the lack of talent during the pandemic as international borders closed and Australian companies survived on a small pool of local employees.
“Being able to enrich a team with talent from overseas is what makes Australia’s tech sector great. However, relying on international employees to fill a void created by a lack of home-grown talent is not a long-term solution.
“We need to start fostering a genuine interest and passion for STEM subjects amongst Australian students in secondary school, as well as encouraging more girls to venture into STEM. This could be in the form of more scholarships and training opportunities for students.
“There should also be funding available to re-train existing employees, as well as providing support to Australians that might be looking to pivot their career into the technology sector.
“Support for employees in rural and regional Australia is often overlooked, yet the pandemic has changed the way employees operate and proved that they can work from anywhere. With better infrastructure in regional Australia, such as investment in high-speed broadband and improved mobile connections, more companies will be able to employ people from across the country regardless of where they call home.”
Enterprise Share Scheme (ESS)
“The government needs to offer greater flexibility in the Enterprise Share Scheme (ESS), including making it easier for smaller companies and start-ups to realistically offer their employees equity and more rights, without limitations, and better tax treatment.
“This has the potential to be a game-changer when it comes to retention and productivity in a tight job market, especially as start-ups don’t often have the resources to match competitive salaries offered by big corporates. And, if the stock ends up being worth something, the government wins by virtue of tax gains.”
Lionel Legros, VP and General Manager for APAC at OVHcloud
What are the three most important sectors for business in the upcoming budget that require the most attention?
Skills shortage
“A shortage of skilled technology professionals in Australia has put a major handbrake on the growth of the local industry. There is a clear role for the government to facilitate and incentivise the learning required for in-demand tech roles and keep up to date with new digital capabilities.
“We must invest in the development of new training models that focus on areas such as cloud, artificial intelligence and data security, alongside a nationwide digital skills standard to foster a strong local talent pool.”
Sustainability
“The data centre industry has among the highest carbon footprints in the world — in Australia alone, data centres account for approximately 3.9 per cent of the country’s total electricity consumption. With demand for data centres expected to remain high, business leaders and government must come together to address industry impact on the environment and ensure that data centres are sustainable for the future.
“It would be worthwhile for the government to review the success of Europe’s Climate Neutral Data Centre Pact, which introduced an industry-wide standard that defines clear, measurable goals to ensure rapid progress for a greener, more sustainable future.”
Digital transformation
“The shift towards digital transformation is surging 20 to 25 times faster than expected, especially in Australia where the digital economy continues to flourish. The challenge now for businesses is to review digital projects that have been implemented during the last two years, and manage their cloud infrastructure and cost of their digital services, to ensure long-term growth, agility and transparency.
“With ongoing disruption and innovation, it is critical that the government supports businesses in their digital transformation and encourages uptake in cloud technology, investing in subsidy grants for a leading, digitally-driven nation.”
Lee Hardham, Founder and CEO of Brauz
What are the three most important sectors for business in the upcoming budget that require the most attention?
“Whilst consumer sentiment was looking up in February according to the ABS, a convergence of crises has turned the tides yet again with the Consumer Sentiment Index declining 4.2 per cent month on month in March.
“Between the conflict with Russia and Ukraine, the catastrophic floods and predictions of interest rate hikes, retailers are understandably concerned that this will lead to purchasing hesitancy amongst consumers.
“What we really need to see from the government is an investment in minimising the impact of the rising costs of living. The last thing the economy needs is rising fuel and housing costs to damage other sectors that have barely made it out of the pandemic alive.
“Measures like cutting fuel taxes and improving childcare subsidies would go a long way in making sure that Australians have more confidence in their spending power to keep the economy strong.”
Rosie Cairnes, VP APAC, Skillsoft
What are the three most important sectors for business in the upcoming budget that require the most attention?
“We need to address the chronic skills shortage in the workforce. We all know there are serious labour shortages across all sectors and the lack of technology talent is a very real challenge for so many organisations. The closure of Australia’s borders for the past couple of years has only exacerbated this problem. Labor’s pledge to have 1.2 million people in tech jobs by 2030 is a good start, but it’s not going to help in the immediate term.
“The government must invest in education and innovation if Australia is to compete in the global economy. We need to attract people to come and work in Australia again, but we also need to widen our skilled labour pool. Reforming the childcare sector will enable greater participation from women in the workforce.
“Workplaces need to be safe, inclusive, and diverse to thrive. For many of us, the global pandemic has changed how and where we want to work. The upcoming budget needs to invest in programs to improve the culture of workplaces, to stamp out bullying, harassment and unfair work practices.”
How will this year’s Federal Budget contribute to Australia’s economic recovery and job creation in the run-up to the Federal election?
“Economic transformation is key. We need to create new industries which lead to new skills, and jobs for future generations. The government has to give both businesses and consumers confidence to take risks, take on new staff or start that business.
“There is an opportunity for the government to make it easier for companies to hire talent from overseas or provide stimulus packages to people who want to start their own businesses. This will create jobs in the run-up to the Federal election.”
What does the Budget mean for Australian businesses and the general public this year?|
“This budget is an opportunity to embrace a ‘post covid’ world. We must get ‘comfortable with the uncomfortable’ and be confident to take the next steps to underpin the long-term prosperity of our nation. Otherwise, there is a very real risk that people will leave for other opportunities overseas and Australia will get left behind.”
Brodie Haupt, CEO & co-founder of WLTH
What are the three most important sectors for business in the upcoming budget that require the most attention?
“Firstly, inflation and the labour market is one sector that requires a ton of attention. With rate hikes looming, petrol prices skyrocketing and many other commodities following suit, inflation and the cost of living is quickly becoming a hot topic that has to be addressed. It is especially concerning for potential first home buyers, as housing affordability falls further. Extra support for first home buyers would be welcome, so investors don’t dominate the market.
“Secondly, education, training, visas and talent is other sectors that can use more help. It is crucial that we’re able to raise the skill set and standard of our workforce to reduce our reliance on overseas talent. However, with that being said, as international borders start to open, there may be an easing in the labour market.
“Last but not least, an emphasis on health is still on our minds as a business. Despite being in the financial industry, the physical and mental health of our staff and customers are pillars that can’t be overlooked. Everyone has gone through a difficult few years, so we want to make sure they get the right support they need.”
How will this year’s Federal Budget contribute to Australia’s economic recovery and job creation in the run-up to the Federal election?
“While there isn’t a solution to most of the issues facing Aussies, this Budget may help to fix some of the short term issues (cost of living, support for young Aussies entering the workforce etc.).
“The economy is starting to bounce back from the harm caused by the global pandemic, with a slight rise in unemployment rates – but hopefully, this Budget will help to accelerate this further.”
What does the Budget mean for Australian businesses and the general public this year?
“Millions of SMEs could benefit from a major overhaul of the way Pay-As-You-Go (PAYG) tax instalments are calculated, which will be a key feature of an $800 million small business and sole trader package to be included in next week’s Budget. The package will also include a significant IT investment aimed at ‘slashing’ small business red tape.
“Interestingly, this years’ Budget also means more accessibility with the NBN boost across millions of premises in regional and rural Australia. As more Aussies opt for WFH, a major flaw has been their access to good-quality internet.”
SMEs will also get some much-needed breathing space, with $1.85 billion worth of cash flow relief. Many of these businesses were ravaged by the global pandemic, so this cash injection will definitely help these businesses stay afloat.
Lars Leber, VP Australia, Intuit QuickBooks
What are the three most important sectors for business in the upcoming budget that require the most attention?
“We expect to see further investments in infrastructure, skills, digital transformation, energy, our regions and Australia’s sovereign manufacturing capability.”
How will this year’s Federal Budget contribute to Australia’s economic recovery and job creation in the run-up to the Federal election?
“The upcoming Federal Budget will certainly be pivotal to helping small businesses recover after a tumultuous few years throughout the pandemic. Just when we thought things would get easier, we felt the impact of Omicron, supply chain difficulties, and experienced the worst floods on record in Queensland and NSW. Cost of living has risen further as a result of petrol price rises and across the globe, we’ve seen the developing situation in Ukraine.
“In addition to extending targeted support for small businesses and those affected by floods, we expect to see further investments in infrastructure, skills, digital transformation, energy, our regions, and Australia’s sovereign manufacturing capability”.
What does the Budget mean for Australian businesses and the general public this year?
“With more positive economic indicators than in prior years, Budget 2022-23 should now look to the post-COVID-19 era and build recovery and confidence across all sectors of the economy.
“I expect a focus on targeted support for vulnerable businesses and addressing the cost of living pressures as the Australian economy continues to reopen. With full employment insight and momentum from a strong recovery, the focus should be on building sustainable growth for the future: rebuilding Australia’s fiscal buffers by reducing debt without risking growth (no ‘cash splash’ on one hand but no sudden ‘belt tightening’ on the other).”
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