Unless, of course, you run a small quantum computing business out of Palo Alto, California.
There are minor elements of this Budget that will help small and medium business, but save for a few specific industries (minerals, hydrogen), the vast majority will be left out in the cold.
This year’s Budget included an extension of the instant asset write-off for another 12 months. Small businesses with turnover of less than $10 million can (maybe) access instant write-offs through to 30 June 2025, which is hoped will promote capital expenditure to help grow their business.
Feeling a sense of déjà vu? That’s because the 2023 Budget included the same announcement, yet 12 months later and with just 46 days before the end of the 2024 financial year, that measure still hasn’t gone through parliament. Businesses are still left uncertain as to whether they can claim an instant write-off for purchases up to $20,000 in this financial year and will, understandably, be dubious about the next financial year.
The Future Made in Australia policy is the centrepiece of this Budget, providing significant funding to the critical minerals industry ($7.1 billion), renewable hydrogen ($8.0 billion) and other renewables / battery industry ($3.6 billion). The Albanese Government clearly believes these industries are essential to national and energy security, but the success of the policy will depend on the Government’s ability to “back winners”; this is notoriously difficult to do in commodity and early-stage businesses.
Small and medium businesses that are able to pivot into servicing these industries may find financial rewards, but at the expense of other industries.
Eligible small businesses will again receive a $325 rebate on energy bills via quarterly instalments, a (now repeated) one-off sugar hit that will technically reduce energy inflation. It is worth noting that Victorian small businesses have a lower energy use threshold which precludes businesses that use more than 40 MWh of energy from receiving the rebate. For comparison, NSW businesses have a 100 MWh threshold and 160 MWh in South Australia.
$1.4 billion in additional funding for social housing and homelessness services to bring the total bill to $9.3 billion. Funds will flow to the states and territories to run the program, but this will take some time to deliver given the competition of resources between the housing industry and government infrastructure projects. The program may well provide a boon for construction, at the expense of private construction projects.
Drought-proofing: $500+ million for various drought-proofing initiatives for farmers.
Sheep exports: $171 million to end live export of sheep.
Apprentice Incentive Scheme: extension of the Incentive System, increasing the payment from $5,000 per apprentice from 1 July 2024.
Small beer: a paltry $41.7 million to support small business, including increased resourcing for the Payment Times Reporting Regulator and further funding for the small business debt helpline.
In all, this Budget is selective in its deployment of funds to business. Rather than providing an environment to increase business productivity overall, the Government is spending in specific industries; a policy that generally does not augur well for business or taxpayers long-term.
As partners in your investment journey, we monitor, examine, and navigate change. The Federal Budget is one such factor in our highly considered investment strategy and wealth management process.
This article is one part of our 2024 Budget series. To read more of our Budget commentary, click the links below:
– Economic and Fiscal Implications
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