Artificial intelligence (AI) is poised to be a game-changer, but for many SMEs it’s a double-edged sword. While some see AI as an opportunity to boost efficiency and innovation, others fear job displacement and the high cost of adoption.
Small business owners are waiting in anticipation for this Tuesday’s 2024 Federal Budget, which they hope will unveil some economic relief. With 2.6 million small businesses in Australia, who employ over 5 million people and train 40 percent of the nation’s apprentices and trainees, this year’s budget is vital for SMEs who’ve been disproportionately impacted by inflation and rising costs of living. Since the previous budget in 2023, the Consumer Price Index (CPI) has increased by 7.8 percent, its highest since 1990, according to the Australian Bureau of Statistics (ABS), putting further pressure on SMEs. Whilst, a lack of spending by consumers has also resulted in a record number of businesses going into insolvency, a number predicted to peak later this year according to ASIC.
With SMEs under immense pressure, relief from the government in today’s budget is vital for Australia’s small business ecosystem.
Economic Relief
The upcoming budget must deliver substantial relief to small businesses including cost of living packages, energy bill relief and rebates, as a starting point. However, bolder initiatives are needed to address the specific economic concerns of small business owners, and the impacts rising costs, persistent inflation and economic uncertainty has had on business.
The focus should be on measures that directly alleviate SME financial burdens, enabling them to navigate these challenging times, not idealistic hard-to-implement policies. Additional energy relief packages will be key to this, given the recent increase in costs. Survival is the most important thing to business owner’s right now and the government needs to step up.
Funding and Training for Digital and AI Transition
Artificial intelligence (AI) is set to be a major talking point in the budget, with Australia significantly lagging behind the rest of the world when it comes to its use and innovation. While many have raised concerns regarding job displacement due to AI, the budget should address these concerns alongside initiatives to upskill and retrain employees to work alongside AI tools.
Likewise, greater initiatives need to be implemented to support AI innovation in SMEs in Australia. SMEs are hoping to see announcements regarding training programs, innovation grants, or funding opportunities that help SMEs embrace and utilise AI effectively.
Fraud and Cybersecurity Support
With cyberattacks costing small businesses over $23 million in 2022 according to the ACCC, SMEs hope the Treasurer will deliver on support against cybercrime. Cyberattacks are increasing in frequency and sophistication, posing a massive threat to SMBs with less resources and funds for prevention. Cybersecurity is a vital issue for all Australian businesses, as breaches often result in significant financial losses and brand reputation damage.
Last year’s tax break for digital spending did little to help small businesses become cybersecurity ready, and paid lip service to assisting smaller players most in need. SMEs hope to see training packages, economic relief for fraud prevention spending and greater education for business owners. Better SME Innovation Incentives Australian businesses have been hit hard post-pandemic, and innovation is flailing.
Much like the rest of the world, venture capital activity has significantly decreased, by more than 50 percent, impacting the future and survival of new businesses. With many businesses now failing, how is the Australian government ensuring the survival of its startup and SME ecosystem in the face of unmanageable rising costs? Tuesday’s budget presents the Treasurer with an opportunity to address innovation head-on, to ensure Australian businesses stay prevalent on the world stage. Last year’s budget was quick to address labour shortage issues for industrial industries, but SMEs want to see investment in digital skills, literacy and innovation, for the jobs of tomorrow which will be drastically impacted by AI.
Widen access to capital for women-led and Indigenous SMEs
Disappointingly, access to capital is still a major barrier for female founders with 43 percent stating, in a 2022 study by the Australian Small Business and Family Enterprise Ombudsman, it has prevented growth. Yet, increasing the number of female business owners to equal that of men could add between $70 billion and $135 billion to the Australian economy, according to Asialink.
Worse still, Indigenous Business Australia (IBA) reported that only 1 percent of all Australian businesses are Indigenous-owned. These dismal statistics point out a glaring gap in the government’s previous budgets, which failed to adequately support women-led and Indigenous owned businesses. We want to see greater support for both female and Indigenous founders, increased funding and education and training programs.
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