The Institute of Public Accountants (IPA) has blasted the Federal Government’s latest Federal Budget for failing to provide enough support to small businesses.
The highly anticipated Federal Budget was released on 14 May and has already been noted for its lack of big-ticket pre-election spending, an $18 billion deficit and its focus on current economic realities.
The largest investments are $9.8bn over a six-year period for school reforms, $19.3bn for the DisabilityCare Australia scheme over seven years, and $1bn to boost Australian innovation, productivity and competitiveness under the A Plan for Australian Jobs scheme.
This scheme has several components. The first is a new law requiring all projects in Australia worth more than $500m to feature an Australian Industry Participation Plan, aimed at backing local business to win more work nationally. Safeguards against unfair competition from overseas are also being strengthened through a new Anti Dumping Commission, and an expanded assistance package for small businesses and start-ups worth $378m will be introduced called the Venture Australia package.
The Government says it will also deliver more than $500m to establish 10 Industry Innovation Precincts across the country designed to fuel innovation and internationally competitive businesses in Australia.
While supportive of the above initiatives, the IPA criticised the Government for failing to reduce the regulatory burdens facing business or providing any tax breaks to support the small business sector. In its pre-Budget submission, the association called for a concessionary rate of tax for small business and removing complicated tax concessions.
“While we welcome measures such as the Industry Innovation Precincts, Enterprise Solutions Program and changes to the venture capital regime, there is nothing substantial to create sustainable, long-term improvements in productivity,” IPA’s CEO, Andrew Conway, claimed.
He pointed out Australia has 2.7 million small businesses representing 96 per cent of all businesses, employing 47 per cent of private sector employment and contributing 35 per cent GDP.
“The Budget is noticeable for what it doesn’t include rather than inclusion of any significant measures for reform [as set out in the Henry Tax review]. We need a plan to build and sustain the future wellbeing of the small business sector so that it can continue to make a vital contribution to the Australian economy,” Conway added.
In addition to the national school reforms, this year’s Budget features a number of education-based initiatives. These include a further $135m for 150 Future Fellowships, $97m for sub-bachelor and postgraduate places, and $68.8m over four years to establish an Alternative Pathways Program for 4000 Australian completing apprenticeships in trades or skill sets in high demand.
The Newstart Allowance will also be boosted by $300m over four years, with further funding for local employment coordinators and the Jobs, Education and Training Child Care Fee Assistance program.
As previously announced, the Government is committed to increasing compulsory superannuation payments from nine per cent to 12 per cent from 1 July 2013 to 1 July 2019, and will spend $24bn on public transport and roads infrastructure over the next six years. It also earmarked a further $12.9m for the $34.7bn National Broadband Network (NBN), split across initiatives for improving local delivery of services and assisting businesses engage in the digital economy.
Among the savings initiatives are plans to scrap the standalone Baby Bonus in favour of reformed family benefits taxes. The Medicare Levy will also rise by 0.5 per cent from 1 July 2014 to offset additional spending in the healthcare sector. In total, the Government expects to shave a total of $43bn off its costs over the next three years.
Treasurer Wayne Swan said this year’s budget will represent an $18bn deficit and said a surplus won’t be returned until 2016-2017.