Treasurer Josh Frydenberg delivered the Federal Budget on March 29, 2022, in the midst of global and domestic economic uncertainty, including a European war, a global spike in inflation, and a new omicron variant spreading across the country.
The budget attempted to alleviate cost-of-living pressures by implementing a temporary fuel excise cut, one-time payments of $250 to eligible recipients, and a $420 increase to the Low-to-Middle-Income Tax Offset.
However, no budget is perfect, and no single budget can cure everything, so we asked experts what they thought was a hit and what the 2022 budget missed.
In what is quite transparently a budget that seeks to appeal to voters in the lead up to the election, the goal of budget repair – let alone achieving a budget surplus – has been completely abandoned.
The business stands to gain from several initiatives in the budget. Businesses which invest in training and technology will be able to deduct $120 for every $100 spent. 600 initiatives will boost regional communities and industries including $2 billion for regional skills development, education infrastructure and more. Employers will receive wage subsidies for apprentices of up to 10% and new apprentices will receive $5000 payments over two years. $2.2 billion has been committed to commercialising university research, and 30,000 more university places than last year have been announced for the year ahead.
One of the more notable misses is the lack of any funding for climate change initiatives, despite committing to net zero emissions by 2050. Ironically too, announced cuts to the fuel excise will undermine the government’s $250m Future Fuels and Vehicles Strategy, which is supposed to make electric vehicles competitive with petrol vehicles.
“Equifax data shows weaker credit demand from SMEs – an early sign that businesses are struggling. This sector will get a boost from tax deduction initiatives, including the 20% bonus deduction for eligible external training courses for upskilling employees.”
“Historically, Equifax has seen that Government cash handouts find their way back into the economy, which could also benefit SMEs if consumers spend with local businesses.”
“Despite these tax breaks, this budget could have gone further in its support for small businesses. I would have liked to see an initiative to find and pay for staff, and something that more closely aligned landlords and tenants. In the first two months of 2022 Equifax mortgage enquiries have softened, an early indicator of declining demand and house prices in the coming 6-9 months.
“Combined with forecasting future movements in interest rates due to artificially high inflation, this is likely to put further pressure on SME businesses.”
“We are delighted with today’s announcement from Federal Government that they will support Australia’s small businesses in reaching their online potential. This incentive, which will see SMEs garner a $120 tax deduction for $100 spent, will provide rocket fuel to Australia’s 2.4 million small businesses through essential digital investment to ensure their future in the Australian economy.
“This announcement is huge news for Australia’s small businesses. Overcoming our gaps in digital capability, which could be life-threatening, enables our nation to make leaps and bounds to digitise. SMEs now have an additional ticket to play in the future of our country.”
Further, the Budget includes an allocation of a 20 per cent deduction in external training for small businesses in skills including digital, with a particular emphasis on regional Australians. MYOB has equally highlighted the opportunity afforded by upskilling SMEs in digital fluency and is delighted to see the investment in this space.
“Businesses with an advanced level of digitisation are 50 per cent more likely to increase revenue, eight times more likely to create jobs and seven times more likely to scale. That’s why we’re so passionate about tonight’s investment in the digitisation agenda.
“The government’s digital adaptation strategy will drive substantial economic gains for Australia, with a solid investment in areas we know will make a difference for the digitalisation of SMEs. With small businesses contributing 35 per cent of Australia’s economy, this is an essential step to assist these businesses in entering the digital ecosystem.”
“We applaud the government’s focus on bolstering our nation’s cyber defences. The $9.9 bn cybersecurity funding boost is a strong indication that both the public and private sectors need to strengthen their cyber defences in the midst of worsening international events.
“While all eyes are on the Russia and Ukraine conflict, which undoubtedly poses a significant cyber threat, there are other advanced cyber actors that can and will take advantage of the current situation. Organisations should not wait for a threat to take place before they decide to take action. It’s important for organisations to have the mechanisms in place to understand what that threat is, the impact it could have on systems and how to respond.
“While it’s important for governments and law enforcement to know where the threat is coming from, it is much more important for the organisations being attacked to have the right technologies and practices in place to prevent or limit the attacks.
“A task of this magnitude requires global governments to leverage the combined resources and expertise of government, industry and other stakeholders to provide timely and trusted information sharing to enhance the nation’s cybersecurity.”
“We support the government’s prioritisation of the cost of living during this turbulent time for Australian households and welcome the initiatives in place to support motorists, taxpayers and more. In saying this, we feel there was a missed opportunity to consider another, equally important, cost of living.
“The cost of living with climate change. Cutting down on fuel is critical to easing some of the financial pressures Australians are currently burdened by. However, there is an alternative solution that we would have liked to see explored which is the long-term opportunity to invest in and realise the true potential of clean transport alternatives.
“The fuel excise is a crucial step in economic recovery, but its intent is to maintain Australia’s reliance on increasingly unaffordable fossil fuels and pollutive transport modes.
“We are confident that the Morrison government and future governments will see the full potential available to them from micro-mobility and hope to see specific funding for investment into cycling infrastructure, subsidies for individuals and businesses to own and use e-bikes, and financial mechanisms to dissuade the use and purchase of fossil fuel-guzzling cars and vans in the near future.
“Australia is well placed to take advantage of the booming micro-mobility market and reduce the impacts of climate change and we welcome a positive discourse with the government to speak to this opportunity. There is so much we can and should be doing.”
“The UNGCNA acknowledges the 22-23 Federal Budget and the commitments made in support of large scale conservation and resilience projects; but acknowledges the missed opportunities to “build back better” and create a more sustainable and resilient economy that places climate action, human rights and anti-bribery and corruption at the centre of its plans.
“Measures announced today including; the Reef 2050 Plan and the additional $1 billion allocations towards the reef; $170 million for threatened species and habitat restoration; and $192 million investment in environmental regulations reforms, is welcomed. Additionally, the Government’s focus on microgrids to support regional and remote communities such as the $148.6 million over five years to encourage investment in “affordable and reliable power” is a good first step.
“However, the Morrison Government’s focus on low-carbon emitting technologies and measures is not a long-term sustainable solution. The UNGCNA urges the government to review its commitment to net-zero by 2050 and set ambitious intermediary climate targets to support the path to decarbonisation. This starts with a review of Australia’s nationally determined contributions and ensuring it is in line with the Paris Agreement before COP27. Meeting the 2050 net-zero target can only be achieved if robust targets for 2030 are in place.
“Additionally, the UNGCNA would have liked to see stronger investments towards large-scale renewable energy infrastructure, and stronger incentives for households to participate in the green economy through subsidies for electric vehicles, solar and battery storage.
“As a wealthy nation, Australia has a responsibility to assist with sustainable development in the Indo-Pacific region. While we acknowledge the increase in Official Development Assistance (ODA) in this year’s Budget, it is still not in line with per cent of Gross National Income (GNI), which the Government committed to under the Sustainable Development Goals (SDGs).
“The UNGCNA encourages the Government to prioritise additional funding in order to achieve the 2030 Agenda, prioritising sustainable and green infrastructure, improving human rights outcomes and combatting bribery and corruption.
“This is the Decade to Deliver. It is critical to ensure that Australia positions itself as a leading economy, based on principles of sustainable development. The Morrison Government has the opportunity ahead of the Federal Election to demonstrate its strong intent toward reaching the 2030 goals.
“This includes supporting a coordinated approach to decarbonisation and a just transition; establishing a smart mix of policies that support international frameworks like the UN Guiding Principles on Business and Human Rights, and committing to stronger governance mechanisms for global issues such as anti-bribery and corruption.”
Fuel excise cut and the cost of living
“The cut in fuel excise is a much-needed relief for Australians, however, it is only for six months. We must be conscious that this is a temporary measure and global events, such as the war in Ukraine, could sadly rage on for years. I would have liked the government to implement a more long-term solution. Offering incentives to companies that provide staff with tools to work from home, or investment in digital technology, would have a significant, long-term impact on the cost of living. It would not only reduce travel costs but also enable employees to live in more affordable locations out of the cities.”
“The government’s $480m promise to improve NBN infrastructure in regional, rural and remote areas is a great win for millions of Australians who have long endured unreliable connections. This move will play a significant role in allowing Australians across the country to be able to work from home. Remote working during the pandemic has proven successful and should be encouraged to further lower unemployment levels.
In addition, more customers than ever are choosing to interact with companies via voice and digital channels, rather than visiting bricks-and-mortar buildings. Boosting the quality of these interactions can only help organisations in both the public and private sectors provide a positive customer experience, improving satisfaction rates and sales opportunities.”
Skills and innovation
“While I whole-heartedly support the government’s $2.8bn investment for the “take-up and completion” of trade apprenticeships, this, unfortunately, will not impact Australia’s tech and innovation industry.
“We saw Australia’s tech industry paralysed by the lack of talent during the pandemic as international borders shut and Australian companies survived on only a small pool of local talent. More needs to be done to develop a STEM workforce, from students in high school right through to the tertiary level. There should also be an investment to re-train existing employees, as well as the support provided to Australians that might be looking to pivot their career into the technology sector.“
“Similarly, while cybersecurity is extremely important to Australia’s defence, the government’s investment in REDSPICE needs to extend beyond cyber. There are many Australian technology companies outside the cybersecurity space that also require much-needed investment, such as software developers and engineers. Local innovation and talent need to find their way to the heart of future budgets so we can focus on becoming a nation of creators, rather than adopters, and build our very own Great Silicon Reef here in Australia.”
“As last night’s Federal Budget was being presented to the nation, there were whole communities that did not have the opportunity to hear about it, because they were impacted by more flooding. The small businesses that have been impacted by natural disasters, including this year’s flooding, have been met with dreadfully insufficient and slow financial assistance. ALNA is disappointed that there was not more allocated to this issue in this Budget.”
“While last night’s budget did not contain any groundbreaking initiatives to really propel the small business forward, it did include measures to lessen the burden.
“There is great expense involved in keeping a business alive for even a day, from commercial leases or mortgage payments for premises to staff, stock, utilities, software, and more. And while small businesses are constantly expressing their desire to further embrace the digital economy, the cost of doing so after the hits of the pandemic can be limiting.
“So we are pleased to see the 120 per cent deduction available for the cost of digital adoption and employee skills training. These are excellent real incentives for small businesses to retrain and embrace technology to take the next step toward their e-commerce and efficiency goals.
“We recently wrote to the Small Business Minister, Hon Stuart Robert MP, looking for relief on fuel excise for our members, particularly newspaper distributors being hit hard by fuel prices. The government’s halving of excise for fuel will give them immediate tangible relief and give them back their money so they can better invest in other aspects of their businesses. We do note that the peeling back of this initiative possibly after six months will be a challenge and one that we hope there will be industry consultation on.
“The investments in regional communications and infrastructure will have meaningful impacts over time for our member businesses operating in regional areas and will support greater employment in the regions.
“A significant missed opportunity in this budget was a commitment to make the least cost routing of small businesses payments mandatory. This is something that we have been seeking because we know the impact it will have on the cash flow of small businesses. Where merchants can have reliable control of payments routing they can significantly reduce costs. Protecting this is critical to reducing inflationary pressures on payment costs.
“We were also looking for a national strategy and leadership on enforcement to stamp out the rampant illegal retailing of illicit tobacco products that have been getting out of control across Australia. This growing issue sees retailers lose sales, but it also sees our nation lose the revenue that would have otherwise been gained in tobacco excise.
“After years of close work with the Federal Government, it’s a shame to see that the fintech industry failed to have really any of its key matters addressed in this budget.
“The closest we came was a $38 million commitment to the rollout of the CDR — $12.5 million per year till 2026. This funding won’t go astray, with many in the industry asking why solutions aren’t already in the market, and why this is taking so long.
“At a stretch, earlier stage fintech may be able to capitalize on the budget’s incentives towards retraining. Other fintech building their businesses around e-invoicing will also have their efforts supported by Canberra.
“Now with both parties’ cards on the table, they have no immediate policy response to the tech talent shortage in Australia. Further training and plans for retraining are admirable for the medium-term, but our sector will shrink and job growth will slow without an immediate response.
“The sector now has to assume that any changes regarding skilled talent visas are politically too tough for either party to enact going into an election. It’s a grim outcome for fintech and the broader sector.”
“One area that needs much stronger action is addressing the challenge of the tech talent shortage in Australia.
“We are investing heavily in developing and launching new products to the Australian market this year and then selling them globally. As a result, we have an ambitious hiring plan in Australia. But a lack of policy assistance — or even recognition of the problem — makes this difficult in the short term. At this rate, we and other ambitious fintech businesses will be forced to seek out talent in other countries, which is a shame given our Australian foundations and the opportunity for Australia to be a global fintech leader.
“We would like to see more be done to develop a larger hiring pool of Australian-based tech talent. Whether this is through overseas campaigns encouraging tech workers to relocate or expats to return. It’s pleasing to see more being done to train tech talent at a TAFE and University level, but like most fast-growing businesses, we need to hire now, not in two years’ time.
“In addition, while it is fantastic to see a strong budget come through this year in support of Australian small businesses, it’s disappointing to see no specific policy or mention to assist in broader recognition and awareness of PayTo, given its launch in July this year.
“Unfortunately, the banks are also moving slowly on educating the public on PayTo. Zai is investing significantly in creating a strong PayTo product and promotional campaign in the lead up to the launch of the platform later this year, and would like to see this investment supported by Government action.”
“This is a confusing budget for the startup sector. To start off with there isn’t even a mention of startups in the budget, once again the sector has been lobbed in with the small businesses.
“It’s unusual for us too, as some of our portfolio companies will actually benefit, with funds being poured into retraining, supporting women in the workforce and the NDIS. Yet for companies not tackling a broader issue, there’s little here in terms of support.
“For us, this again underscores the importance of founding impact companies. If they are tackling the correct issues, the budget policy will fall in their favour. And if they aren’t, well, they better hope Canberra starts to understand the difference between a small business and a startup. Beyond this, the level of climate policy and support in the federal budget is disappointing. It sidesteps this issue, leaving the private sector to make up for the shortfall.
“It’s 2022. We just endured some of the worst floodings we have seen as a direct byproduct of climate change. Surely this should be at the top of the agenda, but it barely copped a mention.
“Everyone in the startup industry was expecting at least one point in tonight’s budget, and this is a measure to ease the bottleneck on tech talent. It’s the one problem that the Federal Government can easily solve for the sector, by streamlining the Skilled Visa process for tech workers.
“Indeed there were a number of changes to visas outlined tonight, but the tech sector sadly did not get a look. It’s a shame as it leaves startups in a holding pattern until more local talent is trained — which could take years. Some startups simply won’t have the capital to hold out of it, so there is a real risk that a lack of action will cost future jobs.
Elsewhere, it’s heartening to see further investment from the Federal Government in the CDR. It’s good to see it’s still on their radar and hope these funds will help in accelerating the rollout.
“There was no mention whatsoever of technology or connectivity in the Treasurer’s speech to the House. Compare our version of ‘nation-building infrastructure’ — which is touted as a pillar of the Coalition agenda — to that in the US. Biden has already committed an additional $USD130 billion in combined Broadband and Energy infrastructure investment over the next 5 years – and they’re already out in front.
“The NBN kept millions of us connected throughout the pandemic however our level of connectivity is nowhere near world-class. We trail Japan, New Zealand and Canada, and will only continue to fall further behind without significant federal investment. The concern here is that yet another year passes by where we fail to make the necessary digital infrastructure investment required to keep pace.”
This post was aggregated from Dynamic Business (https://dynamicbusiness.com).