Budget 2019: Vocational training overhaul needed to future proof small business, advocates say

The government is being urged to take urgent action to address a “collapse in skills” in the upcoming 2019-20 federal budget next week.

Treasurer Josh Frydenberg will hand down what will essentially be an election pitch next Tuesday ahead of a federal poll in May, with the government behind in national polls.

Small-business groups are calling on the government to make vocational education a central part of the budget papers, following widespread criticism of current initiatives such as the PaTH program.

Australian Chamber of Commerce and Industry (ACCI) boss James Pearson said today the government needs to “invest more” in education and training so an additional 350,000 students are funded over the next three years.

Council of Small Businesses of Australia (COSBOA) chief executive Peter Strong agrees, saying action to reform the vocational training space as a whole is overdue.

“We talk about vocational education and training constantly, we need something big to happen,” he tells SmartCompany.

The government is currently reviewing Australia’s vocational training landscape, with findings due to be handed down in the coming months.

The number of apprentices and trainees undertaking vocational education has fallen in recent years. National Centre for Vocational Education Research data for the September quarter last year outlined a 0.6% decrease from the same period in 2017.

Commencements decreased 5%, while completions were down almost 10%, leaving just over 267,000 in training.

Successive governments have struggled to find the right policy setting for vocational training, following the VET FEE-HELP scandal several years ago and a rapidly changing employment market.

There is concern small businesses will cop the brunt if a skill shortage entrenches at a time when the types of roles required within the private sector are shifting from low skill to high skill.

Small-business focus

The small-business community has emerged as a big focus for both major political parties in the lead up to the May election, resulting in a steady stream of SME-focused policy announcements over the last six months.

The government made a splash towards the end of last year, announcing a $2 billion securitisation fund to improve access to finance and several smaller policies to address access to justice and late payment times.

Labor has supported much of the coalition’s small-business agenda, including the securitisation fund, and has recently released a stream of SME policies, including an array of competition-focused reforms.

What do we know about the budget so far? The government is expected to unveil a 2019-20 windfall in revenue, driven by stronger economic activity and improvements in ATO tax collection.

The already announced instant asset write-off extension will be crystalised and it is expected the ATO and other regulators will be given more money to crack down on dodgy operators.

The government is also expected to unveil details about its plans to improve power prices by underwriting new energy supply, which will be watched closely by small-business advocates.

Pearson also wants the government to hone in on simplifying workplace laws and driving down power prices for small business.

Small-business power prices, which have skyrocketed in recent years, are a major pain point for the industry, but with Labor yet to unveil its climate change policy and the coalition coy on whether it will fund a new coal-fired power station, uncertainty persists.

Tax relief, please!

For Aodhan MacCarthmhaoil, founder of waste management business Waster, tax relief is at the top of the list.

“Sometimes it feels like new businesses are getting taxed to the point their survival is in question,” he tells SmartCompany.

The government legislated a small-business tax cut earlier this year, which will bring the headline rate down from 27.5% to 25% by 2022, costing about $30 billion.

There is speculation the government may opt to bring that cut forward in the budget, but MacCarthmhaoil says more targeted relief would be beneficial.

He says increasing the threshold for GST registration from $75,000 in annual turnover to $150,000 would free up a “huge amount of time spent by small-business owners on their tax returns”.

Strong says he’d like to see investment in making it easier for businesses to sign up to industry associations and efforts to better support business owners who are victims of domestic violence.

“The small-business community supports more money going into domestic violence,” he tells SmartCompany.

“We must have specialist support for small-business people who find themselves in a difficult situation.”

How have policies changed the SME outlook?

A survey of 133 SME bosses released by KPMG earlier this week provided a look into how previously announced policy initiatives are affecting small business.

A staggering 77% of those surveyed said they had not taken advantage of the government’s instant asset write-off scheme, amid ongoing concern communication of the policy is lacklustre.

Measures in the 2018-19 budget to crack down on black economy activity, slated to be continued in the coming budget, have had no perceived effect on 86% of respondents.

More than half (52%) of businesses said they were optimistic about the next five years, but a much smaller proportion (37%) said the same about their personal finances.

SmartCompany will be in Canberra covering the budget. Email news@smartcompany.com.au and let us know what you would like to see politicians focus on ahead of the election.

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