At a time when a potential recession looms, and global conflicts and natural disasters are making daily news headlines, we expect Treasurer Jim Chalmers’ federal budget to be a very pragmatic one.
The challenges of the last few years have impacted everyone, but SMEs continue to feel the brunt of skills shortages and supply chain delays. The current inflationary environment is set to be the proverbial last straw on the back of the small business camel.
There’s a good reason the small business is known as the engine room of the Australian economy; it employs around 7.6 million people across a wide range of sectors and contributes around $418 billion to GDP.
Given the SME community’s vital role in Australia’s commercial, agricultural, and industrial landscape, we believe there’s a strong case for the government to introduce additional incentives and measures for SMEs as part of the budget proposals.
Addressing the labour shortage
To combat the ongoing chronic labour shortage, it’s critical for the federal government to address immigration. While there have been some structural reforms in previous budgets, there is a dire need for immediate measures in the wake of the pandemic.
Migrants are an essential part of the small business economy and the lack of new talent on our shores is holding back businesses in IT, hospitality, and construction, where already-thin margins are now at a hair’s breadth.
We’d like to see the government addressing this by:
• simplifying work visa entry criteria
• speeding up visa processing
• reducing the complexity of hiring overseas workers.
We’d like to see some budget incentives to reduce the cost of hiring new employees by increasing subsidies and support.
Investment incentives also need a boost, such as the proposed technology investment tax incentive, which provides a bonus 20 per cent tax deduction for eligible expenditure incurred on expenses and depreciating assets that support digital operations. Helping businesses to invest in digital and related skills would provide much-needed support for Aussie businesses and workers.
Small, practical solutions
Replenishing the workforce and talent pipeline requires broad interventions and comes with its own resolution timelines. SMEs also need small yet practical solutions across their value chain to help their business remain resilient and sustainable. This might include:
• offering better cyber protection
• supporting digital transformation
• fixing unfair trading challenges
• Provide a level playing field between major corporates and smaller players and support changes to skilled migration
• evolving and building the NewAccess for Small Business Owners program and SME Debt Helplines.
We’re looking to the government to make changes to the insolvency framework to better serve small businesses, their creditors, and their employees. This involves continuing the economic support and policy changes, including those in the second stimulus package whereby an SME guarantee scheme and direct cash grants enable more Australian small businesses to restructure and survive the economic impact of COVID-19 quickly.
Financial, digital literacy and cybersecurity initiatives
Digital infrastructure support is critical for SMEs since business is increasingly digitised, personalised, and connected. As recent high-profile events have shown, cyber threats are very real, and many SMEs, who don’t have sophisticated in-house resources, need help to strengthen their data security infrastructure.
While many SMEs have undoubtedly caught up with the need for better cyber security for their business in 2023, a significant proportion is still under-protected or not protected at all online. The opportunity cost of having no, or weak, cyber security is very high – not just financially, but also for brand and reputation.
As the best defence, preparation is vital for protecting your business against today’s threat actors. Building a strategy to invest further in community awareness and skills for cyber security, specifically for supporting SMEs, will help safeguard and strengthen their digital presence; the government can ensure better business prospects and a speedier recovery of the overall economy.
As we wait for the Treasurer’s budget announcement, we’re hoping that other areas will also be supported, such as regional small business support programs and funding towards increasing female participation in STEM and manufacturing. This can be via changes in paid parental leave, grants for female-founded businesses, and the creation of tax concessions that benefit start-ups who are not yet in profit. All these changes will help build a more diverse, stronger workforce.
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