SMEs call on government to incentivise future growth ahead of budget

Small businesses want to see two key things from Treasurer Jim Chalmers on budget night: long-term thinking and incentives to spend on future growth. 

Industry groups and founders have been working hard over the past few weeks to emphasise that cost of living pressures are not just squeezing consumers – they are putting serious pressure on business owners across the country. 

“The immediate area of concern is simply the cost of doing business,” chief executive of the Council of Small Business Organisations of Australia (COSBOA), Luke Achterstraat said. 

Businesses across all sectors have been fighting stubbornly high inflation and supply chain costs for months now, and there’s a sense that many independent operators are approaching the end of this financial year with a sense of trepidation. 

“I think many [small businesses] are being caught off-guard — they are shocked at how their costs have gone up,” said Adam Boote, director of growth at business marketing provider Localsearch. 

At the same time, global growth is still on the agenda for many SMEs, which are hoping they won’t be forgotten as the government prepares to launch its Future Made in Australia policy. 

There are few expectations that huge amounts of cash will be splashed on the small business sector this year, but many say there’s still room to help companies keep investing in product development and exporting. 

Support to spend 

There’s no doubt founders are hungry for details of any policy designed to keep business spending flowing.  

“I think startup founders will be hawkishly looking for any changes to staple policies like the R&D tax incentives and instant asset write-off,” said Des Hang, chief executive of car subscription business Carbar. 

As founders tighten their belts, industry groups say there’s never been a more important time to outline a long-term plan for the country’s instant asset write-off policy. The scheme has been a major carrot for businesses to buy new equipment, even though the spending threshold has changed several times over the years. 

COSBOA has argued the scheme’s threshold should be lifted to $150,000 this year — a level Achterstraat said wasn’t unreasonable given rising costs. 

“A couple of new pieces of equipment could get you to $150,000 pretty quickly,” he said. 

But as the government pledges to focus on local manufacturing, SME founders say they’d appreciate further incentives to help them invest in developing new products. 

The founder of coconut water brand Raw C, Scott Mendelsohn, wants to see more incentives for businesses in the food sector to spend on research and development. 

“If I go and spend $50,000 coming up with new products that I could potentially export to the US and Asia, then that has got to be good for the country long term,” he said. 

As power prices surge, energy efficiency is also in the spotlight, with widespread support from industry groups to extend the timeframes on the government’s flagship policies for incentivising small businesses to spend on making their operations more efficient. 

The chief executive of frozen dessert manufacturer Twisted Healthy Treats, Cass Spies, wants even more detail from the government on the clean energy transition. 

“I don’t really have any visibility of what the government is proposing in terms of assisting businesses like mine to get to that net zero [emissions] target,” she said. 

“We have some internal projects on the go, but I have zero visibility of what sort of support or incentives the government has around us getting to our net zero targets, which is a huge challenge for a business like mine.” 

Thinking global

Plenty of brands are still thinking globally despite cost pressures, and founders like Spies are hoping the government recognises that exporting is also a major challenge in a world of supply chain disruptions. 

Twisted Healthy Treats has big plans to crack the US market, but disruptions at global freight giant DP World slowed its progress this year. 

“It has had a negative impact on the amount of business we will be doing in the US in this financial year, which is very disappointing,” Spies said. Global freight issues have made her second guess the amount of time and effort the company should be putting into developing its export markets. 

If Spies could hear anything in Tuesday night’s budget speech, it would be an acknowledgement of the pressures that exporters face and a plan to make sure Australian-made products can reach new markets with as few disruptions as possible. 

“There is nervousness around our ability as a country to meet shipping deadlines and really participate in that global supply chain,” she said. 

To see SmartCompany‘s full budget coverage, click here.

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