Opposition concerned mid-year budget outlook spending cuts may hurt SMEs

Opposition small business minister Bruce Billson says he will be keenly watching the Government’s mid-year budget update to make sure there are no provisions that could hurt small businesses and independent contractors in the lead-up to Christmas and in the New Year.

The update, which will take place this week, comes as the Government looks for savings in order to maintain a surplus for the 2012-13 year as it had previously promised and offset a $7 billion hole in the budget revealed by Treasurer Wayne Swan yesterday.

“The substantial hit to revenues caused by global economic turbulence means we’ll have to make some difficult decisions to find savings,” Swan warned.

Billson told SmartCompany this morning that it’s “hard to anticipate what will happen” with spending on business programs.

“But small businesses, I believe, are concerned about how directionless the Government is right now with regard to business and the economy.”

While Swan says the Government “won’t be taking the axe” to its budget, Billson nevertheless remains concerned about two topics: the entrepreneur’s tax offset and independent contractors.

The Government scrapped the tax offset and replaced it with an enlarged tax break for assets, but Billson says he will be watching to see if there are any hits to business confidence.

“When that message gets out on its way, I imagine we’ll see businesses being punished and further demoralised. This is putting up taxes for some of the smallest businesses, and it’s very unsettling when that occurs.”

The other key area is independent contractors, with Billson saying the Government needs to make it easier for them to work and operate without being punished.

“There has been a conscious campaign to target independent contractors, arguing that self-employment amounts to some kind of tax rort which is just an absolutely ridiculous suggestion.”

“There is just a lot of new red tape in this area, and a lot of hostility towards independent contractors when the Government needs to be siding with them and siding with small business in order to give them encouragement.”

Finance minister Penny Wong told the Ten Network this morning the Government has needed to cut down on savings in some areas in order to bring the budget back to surplus.

“Equally we need to also recognise that it would be counterproductive to take an axe to the budget in light of global uncertainty,” she said. “There is no doubt the current global economy has made it harder.”

Swan said yesterday that lower-than-expected capital gains tax from companies, superannuation funds and individuals would mean capital gains tax revenue would be $7 billion lower over the next few years than had been forecast in the May budget.

Overall, Billson says he wants the Government to provide “direction”.

“I want to see a clear statement that says small business matters, and we want to see a clear approach to decision-making that reinforces that view.”

“I put out a comprehensive small business policy that even the Government agreed was a positive. There were more than a dozen tangible actions that we committed to – small business needs to be treated as a partner rather than an adversary.”

“I just think the Government doesn’t understands small business, and sees them the wrong way.”