Treasurer Josh Frydenberg presented the Budget for the fiscal year 2022-23 on March 29.
Here’s how the business community reacted to the federal budget announcement:
Tech talent shortage
“It’s no secret there are labour shortages across almost every sector in Australia. For us, the ‘tech talent squeeze’ is very real and the closure of Australia’s borders for the past couple of years has only exacerbated this problem.
Whilst we’ve implemented our own training programs at Mantel Group and are actively widening our pool of talent, taking men and women on from all industries, the government should be investing more in education if Australia is going to be a top ten data and digital economy by 2030.
Business and consumer confidence
“This year’s Budget should deliver confidence to businesses and consumers so we can embrace a ‘post-Covid’ world. Many businesses have closed, and people have lost jobs. Now is the time to give the Australian public some confidence, to take on those additional staff or start that business. It’s good to see some support for SMEs. It would be great to see more incentives for people to take that leap and start a business.
The Australian Attraction Factor
“It would have been nice to see the Australian Government make it easier for companies to hire people from overseas. Currently, it’s too complicated, drawn-out, and expensive.
“Australia needs a marketing campaign to not only get people to come and visit again but to live and work here. The competition for tech talent is global – what will make skilled people come to Australia rather than the U.S or Europe? We must remember that we’re also going to lose some of our talents to the U.S. and Europe, now our borders are open, so it would be great to see the Budget helping to not only attract skilled people to come and live in Australia but keep them here, over the long-term.”
“Australia’s tech skills shortage demands both immediate action and an implementable vision for systemic change, something this year’s budget again fails to deliver. While the shake-up of employee share schemes and proposed tax reforms may attract some global talent to our shores, these initiatives don’t deliver what many companies need today, nor create an environment to make Australia the tech powerhouse it could be.
“In the short-term, finding staff is the one universal challenge for Aussie tech businesses of all sizes. Jobs are being created fast, and to address current shortages, we need to be making it easier for tech talent to enter the country. Without this, salaries will continue to inflate, attrition grow, and ultimately more and more businesses will be forced to offshore work in an attempt to deliver for their customers.
“The bigger missed opportunity, however, is the failure to deliver on the medium and long-term initiatives that can boost home-grown talent into the future. In the medium term, there must be an increase in the number of pathways into tech via reskilling and upskilling programs, as job opportunities increase. Programs like the digital cadetships package announced in recent days, bring us merely one step closer to addressing the opportunity to focus on those still under-represented in our industry, such as women, who make up just 25 per cent of the tech workforce.”
“The $9b investment into cyber defence is a welcomed one from the industry. It’s a sign that the government is recognising what the industry has been saying for years – that cyber security is a massive threat to our nation and that it needs to be treated as such.
“Combined with a bigger slice of the action for SMEs by making it easier for them to gain defence contracts, this is good news for the sector. However, as always, the devil (and the red tape) is in the details, so we’ll be watching carefully to see how this plays out in the coming months.
“In saying that, we still haven’t seen any investment from the Liberals (unlike their Labor counterparts) in a dedicated cyber security ministry. And it’s hard to walk to talk if you’re not prepared to have dedicated resources to fight what is now the frontline of modern warfare.”
“Retailers have had it tough during the pandemic. Almost 18 months of sporadic lockdowns were topped off with supply chain issues, staff shortages and the Omicron outbreak.
“Whilst consumer sentiment started looking up in February according to the ABS, the Consumer Sentiment Index declined 4.2 per cent, MoM, in March as a result of concerns over the war in Ukraine, the floods in south-east Queensland and Northern NSW and expectations of higher inflation and interest rates. This is the weakest score since September 2020.
“There is a definite fear amongst the retail industry that consumer spending will take a nosedive as the uncertainty around the rapidly rising cost of living leads consumers to hold on tighter to their disposable incomes. Retailers themselves have faced rising costs of business, from costs of fabric to freight fees. Some, particularly smaller retailers, have been forced to pass these costs onto customers, further inflating the issue of living affordability.
“As an industry, it’s pleasing to see some of the measures put in place by the government, such as the petrol tax cuts, to minimise the impact of these rising costs. But we need to see this go further, including increased housing and childcare support, in order to prevent the damage from seeping into all areas of the economy.”
“The default reaction of our politicians from both major parties tends to be to rely on our universities and TAFE colleges to bear the brunt of the responsibility in training the next generation. While more funding for our traditional educational institutions will help, this does not reflect today’s reality.
“Many effective technical professionals never attend university or TAFE. And even when they do, much of what they learn in the way of practical skills occurs outside of those institutions. Our government needs to realise this and think in a more agile, contemporary manner.
“For example, the Singapore Government has initiatives such as the “Cybersecurity Capability Grant” and “Cyber Talent Development Fund” which help provide funding and incentives for the cybersecurity ecosystem to improve the cyber resilience of systems and the workforce. This is a much more scalable, collaborative approach and allows for creativity and speed in accelerating towards stated goals.
“The Australian government’s centralised approach in addressing skills shortages is far less scalable and not as impactful. Federating the responsibility to the ecosystem and empowering non-government entities to actively solve challenges is a much more efficient and pragmatic way forward.”
“We all know that the Australian economy’s most precious resource is our people. Equally, the most valuable assets in Australian companies are their people. Growth, innovation, and success rest in the ability to bring the best talent on board – and right now, this is something Australian organisations are struggling with. While the skills shortage pre-dates the pandemic, the current environment has exacerbated this challenge across many key industries.
“It’s pleasing to see the government prioritise skills reform in this year’s budget, including an allocation of $3.7 billion towards a new National Skills Agreement for jobs of the future and $500 million in tax relief for small businesses investing in upskilling their employees. However, it will take time for the industries that are most under pressure to feel the benefits of this funding. And in the interim, Australian organisations are still frantically seeking new ways to recruit the skilled workers they need.
“Accessing skills in international markets will not only be a key survival mechanism for Aussie businesses looking to plug their talent gaps – but it will also create a foundation for them to enter new markets by building a global team with employees in key locations.
“The Australian Industry Group (AIG) found that 73 per cent of Australian CEOs expect to have difficulty finding and retaining skilled labour in 2022. Companies that are open to hiring globally in compliant and efficient ways, and that adapt to the new expectations of a distributed workforce, will be well-positioned to continue their growth and resilience to the talent shortage. When the government’s new skills initiatives are fully up and running, they will have stronger and more profitable companies that can hire Aussies and provide exciting opportunities to the workforce”
“The reduction of the fuel excise goes beyond helping households – this will really help drivers as well. Consumers and businesses should expect this relief to be passed on as a reduction in increased freight charges.
“The 20 per cent deduction to support digital uptake for SMEs is an important step in helping SMEs future proof their businesses and become competitive in global markets.
“The opportunity to grow a business, while navigating constant challenges, such as world events, price increases, flood damage, and the pandemic, comes with intense pressure. So I am pleased to see attention given to mental health support for business owners and also the small business debt helpline program. I’d like to see the mental health support for business owners increase, given the continual strain that they face.
“Given that strain, it was disappointing that the instant asset writes off scheme hasn’t been extended, as that would have been to help businesses to continue to invest in their stability and growth.
“We are also disappointed to see that more isn’t being done to move Australia faster in reducing our carbon footprint. Without a rigorous approach from the government in addressing climate change, businesses are bearing the cost of responsible action.”
“The Morrison Government’s budget announcement on a 120% tax deduction for small businesses to upskill in digital makes complete sense. This is a compelling incentive for business owners to invest in taking their next steps to better business performance.
“During our conversations with thousands of small business owners who we work with delivering coaching and support to develop digital strategies and use digital tools better, a very common challenge we hear from them is that they don’t have the expertise in their team to fully capitalise on digital.
“This is a massive risk to their business being sustainable as their customers are more tech-savvy than ever before. COVID has further accelerated an already rapidly-changing online marketplace. The digital confidence and expectations for quality online customer service have sky-rocketed in the last two years. This is evidenced through statistics, such as online purchasing in Australia growing by 23.4% over the previous year (Australia Post).
“Businesses must act now. It’s time-sensitive and critically important that they implement the expected digital strategies, tools and know-how to meet their customers’ needs. If they don’t, their competitors will, and they’ll be left behind, invisible to their target market and customer loyalty will be greatly diminished.
“This incentive will be well received to more than offset their investment in expert advice, training and support to assist them on their digital transformation journey.”
“In this year’s Federal Budget, Treasurer Josh Frydenberg has offered small businesses a targeted economic roadmap that also recognises that those with higher digital and skills capability perform better.
‘The budget seeks to address the economic risk of consumers shutting their wallets as a result of concern about the state of the economy. Continuing economic growth and closing the capability divide has the potential to spur innovation and productivity among small businesses.
‘We welcome the range of measures announced to support small businesses to digitise and upskill. We are also pleased to see digital service providers recognised in this budget, alongside tax practitioners, as helping small businesses go digital.
‘As a global small business platform, we have observed that technology-focused government measures introduced in other geographies have helped small businesses recover from the pandemic and become more successful.
“Delivering a $120 tax deduction on every $100 spent on technology, such as cloud computing, cyber security and web design, will provide small businesses with access to better tools and services. This should help spur business and job growth. Xero Small Business Insights research shows that highly digitised small businesses outperformed their peers in recent years; technology incentives can help more see these benefits.
‘Recent Xero research also found one-third of small businesses surveyed (33%) believe a cash rebate or grant to spend on technology would help them use digital tools in their business, indicating these measures could bring a welcome tech boost. However, the Business e-Invoicing Right was a noticeable omission from the Budget papers despite its broad-reaching potential; the adoption of e-Invoicing could generate cost savings of $28 billion for the economy.
‘We also welcome the addition of $5.6 million committed to the Fair Work Commission to establish a new dedicated small business unit supporting the sector. Combined with the previous announcement to invest in the Modern Awards Pay Database and other measures on the Attorney General Regtech Roadmap, we foresee a simpler, fairer and more digitised industrial relations system for small businesses.
“Overall, the budget offers a positive agenda for small businesses to harness the opportunities of a more productive, digitised operation.”
“This year’s budget takes important steps in protecting Australia through a $9.9bn boost to cyber capabilities while progressing previous commitments to the Digital Economy Strategy through a $130m bump to the previously allotted $1bn, and digital skilling with a $1bn technology investment boost for small businesses combined with tax incentives to train workers.
“What is unclear at this stage, however, is how plans to commercialise new technology through increased local manufacturing will apply to technology-centric businesses, and what incentives there are to keep entrepreneurs in Australia rather than losing them to international markets. Similarly, the budget failed to address how companies outside small businesses can foster digital talent to plug the skilled labour shortage Australia continues to experience.
“Crucially, as the Government’s budget makes its way into agencies, businesses and the community, funding models and the policies that surround them must no longer hold back the potential impact of the investments. If we want to become a top digital economy by 2030, we simply must stop sandbagging our own efforts by evolving beyond the waterfall processes that have historically seen substantial funds lost in the process and red tape, and caused tremendous delays in the delivery of digital projects and services to Australians.”
“Competing to be seen online for any business owner is an ongoing challenge – we’ve seen the recent launch of the .au domain, Instagram rolling out an algorithm free feed and the ongoing issue of online scams. It’s forever evolving and it’s incredibly competitive out there, but it’s the mum and dad businesses of Australia that ultimately get left behind.
“We need the talent, investment and resources to continue to support these small business owners. That means addressing the current digital skills gap that we are feeling with more learning opportunities, skills hubs and education courses. And while open borders will hopefully bring a trough of skilled migrants to the country in the short term, we must also work on upskilling our own workforce across crucial digital marketing techniques such as SEO, website development and hosting across the long term. Having the right talent in place to nail these services for SMEs will greatly help them in the long run.
“Importantly, the investment will allow SMBs to invest their time and energy into their own business while not having to worry about the digital transformation aspect of it as it’s being well managed by a workforce that is now there to service it.
“The investment put forward by the Government is a start on this journey but we have a long way to go if we’re really going to get behind and digitally support our largest enterprise within the Australian economy.”
“More than two years of pandemic-related border closures, coupled with a pre-existing talent shortage and substantial increase in tech-related jobs, has put Australia deep into a talent crisis. Hiring engineers in this market has become increasingly difficult and it’s more critical now than ever that the government rolls out measures that help attract and retain global talent. One such method would include the proposed reforms to employee share schemes, reducing regulatory and disclosure restrictions, clarifying tax liability and lifting the cap on investments.
“Employee equity schemes are a vital part of how startups attract and retain talent. Metigy’s ESOP gives employees the opportunity to participate in the growth in value of the company. Our goal in creating and implementing the ESOP was to reward members of the team with the financial benefits that come from growing a successful tech scaleup. Working in a scaleup can be equal parts exciting and challenging, and it takes a considerable effort from the whole team to solve a problem on a global scale. Success should yield rewards for all stakeholders, but particularly the team of people who have done the work and made it happen.
“Australia’s restrictive and complicated regulatory framework, in particular the disclosure requirements under the Corporation Act, is very unfriendly to technology companies looking to provide equity to employees, even when there are no costs to acquiring that equity.
“This is not the case in many other jurisdictions (including Metigy’s international offices in the US and Singapore). The ESOP restrictions and regulations make it much harder for us to hire and retain talent in Australia and forces us to focus recruitment efforts outside of Australia where we have the ability to make competitive offers and enable our employees to share in the company’s success.
“We welcome the reforms to employee share schemes initially announced in July 2021 that level the playing field for employees and make Australia a more competitive landscape; however, we hope that these reforms can be enacted quickly and are not subject to protracted consultation, given the reforms have overwhelming support from the tech community.“
“The last year has been uniquely tough on Australia’s shift workers. Nurses and train drivers were on strike for better pay, hospitality venues struggled to stay open, aged care workers suffered burnout and those in the arts and events industries were further hit by the Omicron wave. The Federal Budget is an important moment to address challenges facing Australians each year and the biggest challenge affecting many workers to date is the unrelenting Covid-19 pandemic and its long term consequences.
“This has all been set against the backdrop of inflation and increased cost of living which rose by 4.25%. Despite this, it is disappointing to see that wages are not predicted to grow any time soon. In fact, wages will only be just higher than inflation in the next couple of years, meaning the cost of living pressures is unlikely to ease in the near future. Despite the government rolling out some initiatives to support small businesses and tax-payers, we have a long way to go,”
“Positively, the government’s promise to commit $1 billion to the Technology Investment Boost is a step in the right direction for small businesses, which have proven to be a lifeline for the economy while borders were closed. The pandemic has undoubtedly sped up the digital shift and this investment will prevent these important businesses from being left behind.”
“As Australia’s Assistant Minister of Defence recently stated, ‘Our economy is more connected than ever before and securing Australia’s digital sovereignty is vital for our national sovereignty.’ Though threats to critical infrastructure, government, and large enterprises are more well-known – businesses of all sizes are increasingly at risk of cybersecurity breaches and ransomware attacks.
“In fact, BlackBerry threat researchers found that small and medium enterprises (SMEs) face upwards of 11 to 13 cyberattacks per device per day, a rate much higher than larger enterprises (BlackBerry 2022 Threat Report). At the same time, Australia’s skills shortage disproportionately affects SMEs. Upskilling the nation’s security professionals will help boost the cyber resilience of SMEs and the wider economy.
“BlackBerry supports the $1B Technology Investment Boost incentivising small businesses to enhance their digital fluency and invest in cyber security systems and skills. Complementary to this, the government has the opportunity to support SMEs in adopting a ‘predictive cybersecurity advantage’ through the utilisation of modern automated security tools. For example, AI (Artificial Intelligence)/ML (Machine Learning))-driven security tools can identify and block cyber threats before they execute.
“Further, Managed XDR (Extended Detection and Response) services can give SMEs around-the-clock access to these AI/ML-driven security tools, as well as a skilled workforce with expertise in threat-hunting and other critical skills to prevent and defend against cyber incidents.
“Small businesses employ nearly 8 million Australians. As such, efforts to protect SMEs in Australia must be prioritised, along with the larger budget focus on cybersecurity across government and critical infrastructure. BlackBerry stands ready to help government departments and agencies, as well as enterprises of every size and sector, bolster their cybersecurity defences.”
“As we all know, each year some sectors get luckier than others in the Budget announcements. One of the emphases of last night’s announcement was small businesses. Indeed, The government revealed the “technology investment boost” in its 2022-23 Budget, with the measure to apply immediately and run until the end of June 2023.
“As the federal government pushes to accelerate digital adoption, small businesses will now be able to deduct a further 20 per cent from the cost of cloud services and cyber security systems – a move DiviPay is very supportive of. The Australian technology landscape is broad and there are plenty of choices for companies. Tax reductions will encourage businesses to more readily adopt these technologies, ultimately saving them both time and money as teams can redeploy their time to higher-value tasks.
“Unfortunately, many SMEs still struggle to go digital. Finance is often seen as the last function to be digitalised because of its logistical difficulties, but there are some easy steps that a company can take to go digital – one of them being digitalising their expense processes for employees. It’s not just about going from physical card to digital card, it’s about integrating a digital-native expense system and enabling managers and employees to take ownership of their expenses. This helps to reduce wasteful spendings, such as avoiding duplicate subscriptions and fraudulent transactions, and if it saves the finance team and business owners time, all the better, right?”
“It’s encouraging to see the government finally investing in digital and providing tax incentives for small businesses. Such measures will assist SMBs reluctant to invest in technology due to their constrained budgets. However, it will not necessarily contribute to their survival. Small businesses have been hit the hardest in the last two years, and it’s disappointing that the government did not go further. Very little support was included to help with small business cash flow and depleted capital. Still, greater rebates surrounding staff training is a positive. The rebate will ensure talent feel nurtured, reduce mass movement in the market and promote business productivity.
“Overall this budget falls short for small businesses given the severe disruption from the recent floods, global conflict, and the lasting effect the pandemic has had.”
“It’s encouraging to see that Treasurer Frydenberg has provided significant weightage to the importance of digital innovation and small businesses in the Federal Budget 2022. Backing small businesses with the lowest tax rates in 50 years is a great move to support the recovery and growth of the SMB sector, which has been severely impacted by disruptions created by the pandemic and extreme weather conditions.
“The government’s thrust on digital technologies and technology advancement is a right step that will provide significant impetus to the sector. The tax incentives surrounding cloud computing, eInvoicing, cyber security and web design will encourage SMBs to further speed up digital innovation and enhance their businesses. Small businesses without the cash flow to invest in digital transformation will now have the capacity to do so, which will positively affect the overall economy.
“Likewise, we’re pleased to see support for training and skill-building initiatives. The tax relief on staff upskilling will encourage SMBs to train and develop the right skill set, which will contribute to their productivity, growth and competitiveness. However, for borderless businesses, such as ours, with staff across the globe, it’s disappointing that the government has limited funding to Australia only. Since we have customers worldwide, around 50 per cent of our staff works remotely from different geographic locations, with Australian hours and an Australian head office.
“As digital transformation changes the way business operates, the government should not limit business and staff incentives to Australia. This will help Australia-based businesses to expand globally and put the national economy on a favourable growth path.”
This post was aggregated from Dynamic Business (https://dynamicbusiness.com).