The Council of Small Business Organisations of Australia has demanded a third stimulus package aimed at businesses to be included in the federal budget, which will be unveiled in May.
While Prime Minister Kevin Rudd has said that a third stimulus package focusing on infrastructure spending is under consideration, COSBOA chief Jaye Radisich says businesses should the focus of any stimulus.
“Essentially we think that the government needs to recognise the contribution of small business to economic recovery. We think that in order to stimulate the economy with cashflow and ensure people keep jobs, small business needs to be looked after,” she says.
“We’re seeing a lot of bailout money going to large companies who are failing and putting off groups of staff members. We think there’s a big need for a small business stimulus package to serve as prevention to massive job losses.”
The COSBOA stimulus focuses on taxation, banking and finance issues. The package offers incentives to small businesses and/or remuneration to employees through Centrelink, incentives to compensate the states to reduce payroll tax, and streamlining tax procedures.
The package also suggests regulating transparency for SMEs in the financial sector, allowing SME customers to access Rudd bank-style facilities to help cashflow.
Other suggestions include:
Radisich says that SMEs must receive stimulus measures due to their importance to the health of the overall economy, even if they lead to a higher deficit.
“The country’s budget works fairly similarly to a household budget. Sometimes it’s in surplus and sometimes we must use credit. If we have to go into deficit to make sure we retain jobs and keep people off welfare and keep community spirit high, then it’s worth doing.”
But exactly how much money the Federal Government will have to play with is unclear, with Treasurer Wayne Swan saying the budget is facing a “huge challenge” due to falling tax revenue and rising spending.
Swan told Fairfax radio that a new International Monetary Fund report reveals toxic assets worldwide could total up to $6 trillion, and that the budget may be tougher than expected.
“I think we’ll have the fifth downwards revision in growth in just six months, so that just really gives you some sense of the challenge we face in this forthcoming budget,” he said.
“That will certainly mean a higher deficit – it will certainly mean higher unemployment and it will certainly mean that we’ve got to continue to stimulate our economy as we go through and weather this storm.”
Despite this, Rudd said yesterday that the Government will continue to provide economic stimulus through the budget, with much of this cash expected to be spent on infrastructure projects.
The government body Infrastructure Australia has just completed its national priority list and delivered it to the Government. The list includes 94 investment proposals totalling about $200 billion.
Access Economics spokesman Chris Richardson has told The Australian that while infrastructure spending on projects such as bridges and roads is likely, it will result in a massive deficit.
“This financial year … we are looking down the barrel of a $50 billion budget deficit,” he said. “It’s not actually this budget that worries me so much, it’s the budget beyond it.
“Three or four years from now the crisis is history, but we will still have very large budget deficits.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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