The NSW Budget 2024 presents mixed outcomes for SMEs. While healthcare, construction, and environmental sectors see potential benefits, retail, hospitality, and real estate SMEs might face challenges.
The emphasis on public housing and healthcare indicates a strategic focus, but broader economic support for diverse SMEs appears limited.
The New South Wales government has introduced a budget aimed at addressing cost-of-living pressures while managing a $3.6bn deficit. While the budget includes significant measures for healthcare, housing, and energy, several aspects directly affect small and medium enterprises (SMEs).
Winners
GP Clinics and Healthcare SMEs The budget includes a $189m investment over four years to support GP clinics by reducing operational costs, thereby encouraging more bulk billing. Key measures include:
- Payroll Tax Waiver: Historical payroll tax liabilities for GP clinics will be waived, costing $104m.
- Ongoing Payroll Tax Rebates: Clinics in Sydney that bulk bill over 80% of patients, and those in the rest of NSW that bulk bill over 70%, will receive ongoing payroll tax rebates.
These reforms are expected to alleviate financial pressures on healthcare SMEs, allowing them to focus on patient care and potentially expand their services.
Housing and Construction SMEs The Minns government has allocated substantial funds to boost housing, which will likely benefit construction and related SMEs:
- Public Housing Investment: $5.1bn will be used to build 8,400 new public housing units.
- Housing Repairs: $1bn is earmarked to repair 33,500 existing homes, including $200m for properties managed by the Aboriginal Housing Office.
- Build-to-Rent Programs: $650m will support build-to-rent schemes and accommodation for key workers, driving demand for construction services.
These initiatives aim to stimulate the housing market, providing opportunities for SMEs in construction, maintenance, and related industries.
Energy and Environmental SMEs While the budget maintains its previous year’s spending on environment and heritage, some new measures could benefit SMEs in the environmental sector:
- Waste and Recycling Projects: $43m is allocated for waste and recycling initiatives, offering opportunities for SMEs in these fields.
- National Park Maintenance: $75m is set aside for national park maintenance, potentially benefiting SMEs specializing in conservation and related services.
Losers
Retail and Hospitality SMEs Rising costs and a lack of direct support measures in the budget may challenge retail and hospitality SMEs. The focus on public sector wages and housing does not extend to specific relief for these sectors, which continue to face high operating costs and economic pressures.
Real Estate and Property Management SMEs Changes to land tax and foreign investment surcharges will affect real estate and property management SMEs:
- Land Tax Adjustments: Owners of multiple properties will see increased land taxes over time, which could impact property management businesses.
- Foreign Owner Surcharges: Increased surcharges on foreign property owners may reduce foreign investment, affecting real estate SMEs.
High-Income Professional Services SMEs The budget aims to limit wage increases for top-level public sector managers, potentially setting a precedent for private sector wage policies. High-income professional services SMEs might find it challenging to justify salary hikes, impacting talent retention and recruitment.
Environmental SMEs Despite some new funding, the overall environment and heritage budget remains flat, effectively a cut when considering inflation. This could limit growth opportunities for SMEs focused on sustainability and environmental innovation.
Ben Thompson, CEO and Co-Founder of Employment Hero said: “The recent NSW budget announcement has sparked some mixed feelings, particularly for small business owners that have been heavily impacted by stubborn levels of inflation and high interest rates. While some sectors have received targeted assistance, the broad consensus is that more could have been done, especially in terms of support for struggling SMEs.
With nearly 850,000 registered small businesses in NSW, they form the backbone of the economy, and their ability to hire, retain, and grow their teams is essential for economic recovery. The ongoing challenges they face – from managing cash flow to retaining staff in a competitive job market – necessitate more targeted support. Our own SME Index data which tracks the salaries and growth of the 150,000 AU businesses on our platform shows that wages are continuing to steeply rise year-on-year. Since this time last year, they have risen by 7.5%, heavily contributing to the growing cost of doing business. In addition, the year-on-year growth of SMEs has almost halved.
It’s not just about financial support, either. For instance, navigating the complexities of employment law and compliance can be a significant hurdle for many businesses. Something many will have to tackle when the new Industrial Relations measures take effect in August.
Overall, it will be interesting to see how the government adjusts its strategy in the coming months, and whether more targeted support for businesses will become a priority. With more and more businesses failing every day, we – alongside thousands of business owners – hope that additional assistance is provided.”
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