All-in for economic recovery: What’s in the upcoming budget for small businesses?
Small businesses are set to benefit from incentived employment programs and fast-tracked tax cuts in the federal budget.
Businesses are getting a peek at what the federal budget will contain in a few weeks, as Prime Minister Scott Morrison signals measures to replace JobKeeper with other programs such as wage incentives to boost aggregate demand.
Flagging the prospect of a spending-focused budget on October 6, Morrison told ABC’s Insiders on Sunday the federal government is preparing to unveil measures to support small business owners.
“There are a range of measures that are in the budget, I can assure you, which are going to be pro-boosting aggregate demand,” Morrison said.
Asked how the government will maintain programs for businesses after JobKeeper is pared back in October, Morrison teased the possibility of new initiatives, amid reports cabinet is considering a new wage incentive program to help reduce unemployment.
“There are a range of other measures that [can] come in and pick up where others left off,” Morrison said.
With the 2020-21 federal budget a little over two weeks away, more information is surfacing about the types of programs the government will pursue to help combat the ongoing recession, driven by the COVID-19 pandemic.
Treasurer Josh Frydenberg said last week the budget would focus on the next phase of the government’s so-called JobMaker program, which was announced in May to overhaul vocational training and pursue industrial relations reform.
Echoing his earlier calls for sweeping supply-side reforms, Frydenberg said the budget would focus on “getting more flexibility in our labour market, cutting red tape, focusing on skills, making it easier to do business”.
A major package of infrastructure spending and an investment allowance to boost private sector confidence are also being considered, the AFR reports.
There has also been widespread talk about the prospect of bringing forward a raft of income tax cuts, which were initially announced in last year’s budget.
The stage two cuts increase the income threshold for the 32.5% tax bracket from $90,000 a year to $120,000 a year and increases the 19% bracket from $41,000 to $45,000.
But the prospect of fast-tracked income tax cuts is already coming under fire, with a group of economists, including former Reserve Bank governor Bernie Fraser, rubbishing the idea in a campaign launched by progressive think tank The Australia Institute on Monday.
“The unfolding COVID pandemic is a stark reminder to all policymakers of two fundamental truths: that while many of us work and spend in economies, we all live and die in communities; and, secondly, the most vulnerable groups in those communities are always hit the hardest in major crises like this pandemic,” Fraser said in a statement.
The think tank argues the tax cut isn’t an effective way to boost aggregate demand amid the recession, benefiting relatively wealthy Australians at the expense of public services that bolster economic activity among other demographics with a higher propensity to spend.
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