FEDERAL BUDGET 2012: Business groups reveal why the budget is “neither here nor there” for small business

Business groups pointed to some positives in last night’s federal budget despite disappointment at a lack of support for business.

Peter Strong, executive director of the Council of Small Business Australia, told SmartCompany this morning, “for small business, the budget was neither here nor there”.

Strong says because most small businesses are not incorporated, the Government’s back flip on reducing the company tax rate was “a big business, not a small business, problem.”

“Some things in the budget are not good for small business, but all that money going to consumers should be good for business,” says Strong.

“What they did do was achieve the surplus and they have hit big business to do that.

“The instant tax write-offs and those sort of things are good, but they have been announced in three budgets in a row in some cases.”

Strong says positives for business to come out of the budget include the loss-carry back scheme and the announcement of funding for a Small Business Commissioner.

“The fact that we have a commissioner funded is really good, but now we have to make sure they are independent,” says Strong.

“We would have liked $5 million [a year] in funding for the commissioner, but $2 million in a bad budget is a good thing.

“The Small Business Commissioner does not start until January 1, so we still need to maintain this momentum in getting rid of red tape and also emphasise that each small business is a person.”

Strong says the announcement of Government funding for a Small Business Commissioner was ignored by much of the media.

“We have been lobbying for it for 20 years. The interesting thing is that not many people have picked that up,” he says.

“The mainstream media still don’t get small business.”

The Australian Retailers Association said retailers would view the federal budget with mixed feelings after it gave some relief to business and households, but didn’t go far enough in providing long-lasting support for a struggling sector.

ARA president Roger Gillespie said retailers would benefit from the tax loss carry-back scheme and deductions for assets under $6,500, but would have liked further initiatives to help retailers focus on growth.

“Retailers will also benefit from the relief provided to low to middle income households through Family Tax A and the Schoolkids Bonus, but ARA would also like to have seen these as tax cuts, as well as provide a real difference in consumer confidence by putting more money into the pockets of upper and middle income earners,” said Gillespie.

“ARA is concerned the Government has given with one hand, through initiatives for business and consumers, but taken with the other, with no compensation for the Carbon Tax or superannuation increases, which will hit retailer and consumer confidence once short-term budget benefits wear off.”

For the Australian Industry Group, the budget surplus was welcome, but the AIG warned there were “considerable risks” in the way the surplus had been achieved.

“The additional taxes and costs imposed on industry will undermine the ability of business to make the critical longer-term investments needed to boost productivity, improve our global competitiveness and lift employment,” AIG chief executive Innes Willox said.

Willox said scrapping the company tax cut was a “major blow to business” and a lack of commitment to reaching consensus on business tax reform was “deeply disappointing”.

“While the previously announced loss carry-back measure will provide some benefit to businesses, this will not provide immediate relief, and it will be overwhelmed by maintaining the company tax rate at a level well above that of similar developed economies.

“The changes to the tax treatment of Living Away From Home allowances and benefits will exacerbate the difficulties for business in attracting highly-skilled employees to fill positions away from their home.”

However, Willox said there were a number of positives in the budget for industry, including the increase in the level of permanent immigration for 2012-13 to 190,000 to help address skill shortages.

“The greater emphasis on incentives to encourage the workforce of mature-aged Australians is an important contribution to boosting workforce participation,” he said.

“In the lead-up to the budget, AIG argued against further changes to the Research and Development Tax Incentive and we are pleased that the Government has not sought to achieve further savings in this area.”