Industry leaders praise budget, but some hesitant

Business and industry leaders have mostly praised Federal Treasurer Wayne Swan’s budget for 2009-10, but some are hesitant and claim more could be done to help small business.

Jaye Radisich, chief executive of the Council of Small Businesses of Australia, says that “it is good to see that small business is clearly back on the agenda at the federal level”.

Radisich praises the extension of the small business tax break to 50%, the new R&D tax credit and particularly the creation of a small business support line.

“The challenges that are now facing small businesses in this recessionary period are serious, and small businesses need the confidence to know that there’s someone to turn to when things get tough,” she says.

“Having a dedicated first point of contact for inquiries ranging from problems with access to finance through to retail leasing issues will be an important service to small businesses.”

But Radisich says it is crucial that small businesses take part in the extensive infrastructure projects detailed in the budget.

“Labour, goods and services needed to build our roads and new national broadband network must be sourced from Australia, and a good chunk of the spend needs to go to small businesses,” she says.

Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, says that the infrastructure projects are welcome but the budget “misses opportunities” to reduce taxation.

“It’s a budget aimed at these tougher times, but the mix of big spending and moderate saving is a risky high-wire act, albeit a calculated one” he says.

Anderson welcomes the increased investment allowance and extra funding for the Export Market Development Grant Scheme, but says the budget should have included initiatives to reduce payroll tax.

“On tax, the failure to set out a plan for restructuring federal-state financial arrangements (for) taxes on jobs like payroll tax is a lost opportunity,” he says.

“Growing the size of the economy and eliminating non-essential government programs are key ingredients to returning the budget to surplus. Based on budget estimates, a return of pre-recession economic activity will not be enough to restore Commonwealth finances to surplus in the medium term.”

Richard Evans, executive director of the Australian Retailers Association, says that the $22 billion set aside for infrastructure is important, but more is needed for job creation outside of construction and engineering.

“This federal budget seems more about politics than the need to generate demand and maintain jobs. There is a lot of guesswork and a lot of long term forecasting and projects – but little for job stability now,” Evans says.

“That being said, we do applaud the boost from 30% to 50% of the small business tax break and the extension to the end of December 2009. In terms of the increase to the pension – the ARA supports the move but sees it as too selective.

“Young people in this budget have been left behind,” Evans says. “And without direct stimulus and support to the retail sector – a large employer of young people – the ARA sees youth unemployment under direct pressure.”

The biotech industry has praised tax credits for research and development, with AusBiotech saying companies with revenue under $20 million will benefit.

“Yesterday’s budget announcements saw the culmination of industry voice and appropriate Government response,” chief executive Anna Lavelle says. 

The budget included 45% refundable tax credits for companies with revenue under $20 million, 40% tax credits for companies with revenue over $20 million, and $196.1 million for a commercialisation institute.

“The 45% refundable tax credits will be a big boost to help those innovative companies which are at the heart of our economic recovery effort,” Lavelle says.

The Australian Industry Group was pleased with the budget, and welcomed extra tax breaks and concessions for small businesses. Chief executive Heather Ridout says: “The budget supports the economy in these tough times while pushing the re-set button in a number of important areas. These include infrastructure, education, science, innovation and welfare reform.

“The announced investments in road, rail and port infrastructure are particularly welcome. These investments will lift the productive potential of the economy over the long term,” Ridout says.

“Measures for business include the increase in the investment allowance for smaller businesses, the additional funding for the Export Market Development Grants (EMDG) scheme, and the recasting of the research and development tax incentive. The extension of the first home owner boost will provide additional stimulus to the housing industry and the many businesses supplying home construction.”

More budget 2009 coverage:

• Budget 2009: Small business tax break boosted from 30% to 50%
• Budget 2009: Exporters get extra funding
• Budget 2009: Do Not Call register expanded
• Budget 2009: $22 billion for infrastructure in budget
• Budget 2009: First home owner grant extended for three months
• Budget 2009: High and middle-income earners hit by changes to private health insurance, super
• Budget 2009: Innovation spending boost, but new R&D tax breaks delayed
• Budget 2009: Key budget measures at a glance
• Budget 2009: Holiday shack attack
• Budget 2009: Funds for textile, clothing and footwear sector