How governments can help businesses as insolvencies rise in 2023
Here are four steps governments should take in 2023 to support small business resilience and economic sustainability.
Raising a glass and wishing everyone a ‘Happy New Year’ is usually a sign of new beginnings. But it’s understandable if this time around your bubbly is flavoured with a tipple of uncertainty.
Insolvency rates increased in 2022 and are back to pre-COVID–19 levels. CPA Australia members working in insolvency are receiving a heightened number of enquiries. So, we expect this trend will continue to climb in 2023.
There’s no doubt the new year is going to be unpredictable. But there are ways that federal and state governments can support small business resilience and economic sustainability. Here are four steps governments should take in 2023.
1. Digital development assistance
Cybersecurity concerns rocked Australia in 2022. The headlines were dominated by big businesses like Medibank and Optus grappling with cyberattacks. Unfortunately, small businesses are also in the firing line and don’t have the technology resources big businesses can command. Small businesses need help improving their cybersecurity capacity.
Cyber isn’t the only tech small businesses need a hand with. CPA Australia’s annual Asia Pacific Small Business Survey found Australian small businesses are falling behind on digital uptake. In a tech-focused world, they need digital skills and appropriate technology to be as productive and profitable as possible.
The federal government is offering a temporary Technology Investment Boost until June 2023 but small businesses struggle to understand the technology and how to apply it to their operations. State governments should consider programs that support investment in selected technologies to complement the federal scheme.
2. Standardised and scalable disaster support
Australia endured significant flooding and storm events in 2022. We know natural disasters brought on by climate change will occur with increasing frequency. While governments have demonstrated their willingness to help businesses when disaster strikes, there is currently no standardised form of support. This lack of pre-planning inevitably leads to delays in the delivery of support and means small businesses face immense pressure while handling a crisis.
Small businesses struggle when a crisis hits and are often unsure about how to get the help they need. This problem needs to be tackled by governments before the next disaster hits. A standardised and scalable disaster support package provides certainty and can be deployed quickly during times of distress.
3. Permanent full expensing
The federal government should make temporary full expensing permanent for small businesses. The instant asset write-off and temporary full expensing have helped many smaller companies invest in assets that make their business stronger. Further, the initiative has made tax depreciation less complex.
We want to see temporary full expensing made permanent, particularly for small businesses. This would help increase capital investment and support the economy.
4. Incentives to seek advice
The best way for businesses to put themselves on the front foot for recovery and growth is to seek advice. Federal and state governments need to focus on policies that can be rolled out quickly, have an immediate impact and offer the biggest bang for their buck. Incentivising businesses to seek professional advice from accountants and lawyers ticks all these boxes. Not-for-profits and charities should also be offered financial assistance helping them access advice.
Some businesses have already started reaping the benefits of government schemes offering funding to speak to trusted advisors. The Victorian Small Business Specialist Advice Pathways Program worth $5 million launched in 2022 was fully subscribed within 72 hours.
Governments can bolster the economy by expanding existing programs and launching similar schemes. Hundreds of thousands of businesses would benefit from schemes helping them access advice in 2023.
Gavan Ord is CPA Australia’s senior manager of business policy.
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