Entrepreneurs and business owners will be very pleased to see that Federal Treasurer Wayne Swan has not forgotten them in his Great Recession budget.
The decision to increase the small business tax break from 30% to 50% on assets purchased before the end of 2009 is a good one: it supports growing businesses through a difficult period and will stimulate the economy by bringing forward capital investment.
An extra $65 million for R&D tax concessions will also be welcomed, although the fact that the Government has delayed a new R&D tax credit scheme, (that it claims will double the level of assistance available to business to $1.4 billion), will not be so warmly received.
An extra $50 million for the much-loved Export Market Development Grant scheme should be applauded and entrepreneurs will even like the $10 million Small Business Support Line, a referral service that will help SMEs deal with issues like cashflow, financing and marketing.
Small businesses were walloped in last year’s budget, with almost $1 billion of entrepreneurial assistance measures slashed, including the $700 million Commercial Ready scheme.
At face value, the fact that this budget contains specific measures to assist small business is a positive step forward from the Rudd Government.
But it won’t take long for entrepreneurs to realise they are paying a big price for these initiatives in the form of changes to the private health insurance rebate and superannuation system.
Swan has made no excuses for asking high and middle-income earners — a group that includes thousands of small and medium business owners — to contribute more “because they can afford to do so”. He says this is a budget about creating jobs, building infrastructure and position Australia for economic recovery, and hard choices must be made.
Entrepreneurs could swallow this argument if only Swan had backed up his words with action.
Yes, there is plenty of money for infrastructure. Yes, there’s a bit of cash for business assistance. Yes, there is welcome spending on health, education and training.
But the biggest budget initiative for 2009-10 — at a staggering $2.7 billion, three times larger than any other single spending measure — is a $30-a-week increase in pensions for seniors, carers and people with a disability.
These groups are undoubtedly worthy recipients of more money. But make no mistake — they do not create jobs, they will not have any influence on the kick-starting the economy and they will not help “position us to capitalise on the global recovery when it comes”.
In a year when recession is imminent and the Government desperately needs entrepreneurs to help get the economy moving again, throwing $2.7 billion at pensioners, ($14 billion over the next four years), does not look like a smart move. Slugging these entrepreneurs for over $1 billion next year looks even dumber.
In his second budget speech, Wayne Swan correctly described small business as “the backbone of the Australian economy, employing around half of all private sector workers”.
Small business owners will be pleased the Rudd Government has recognised their importance, but they should be angry that they have been slugged and an opportunity wasted.