2024-25 Australian Federal Budget: Chalmers fails to charm small business owners

Canberra, 15 May, 2024

You might need a doctorate to write the 2024-25 Australian Federal Budget, but you don’t need a crystal ball to read Australia’s future.

The Government’s Budget centrepiece, Future Made in Australia does not appear to have any focus on small and medium sized businesses. It’s important that small businesses are part of Australia’s future, but if they don’t get the support they need, they are at risk of being left in the past.

“The ATO is chasing $50 billion in undisputed debt, 65% of which is owed by small businesses,” said Institute of Public Accountants Group CEO Andrew Conway.

Margin erosion has eaten into small business profitability, especially for price takers. The Australian Small Business and Family Enterprise Ombudsman estimates that 43% of small businesses are not profitable, and 75% take home less than the average wage despite working longer hours than the average employee.

Ironically, the budget will provide $10.8 million over two years from 2024-25 to extend the Small Business Debt Helpline and the New Access for Small Business Owners program to continue to provide financial counselling and mental health support for small business owners.

“Inflation is squeezing profit margins, rents and utilities are constantly rising, and labour costs are threatening the financial sustainability of many small businesses,” said Mr Conway.

“While small business owners appreciate the extension of the $20,000 instant asset write-off by 12 months until 30 June 2025, they're still waiting on the same one from last year that hasn’t passed Parliament,” said Mr Conway.

“Sadly, the Treasurer has failed to charm small business owners that really need help, including genuine tax reform and targeted red tape reduction,” said Mr Conway.

“While we appreciate the temporary instant asset write-off extension for another year, it might already be too late because most business owners may not want to invest in ageing capital assets until their profitability improves,” said Mr Conway.

“Australians have a right to know how the government spends their money, and that more transparency is needed to improve the outcomes for taxpayer funded initiatives, including the expansive Future Made in Australia,” said Mr Conway.

For example, a study from the IPA Deakin SME Research Centre published earlier this year found that the vast majority of Commonwealth Government grants awarded to businesses between 2018-2022 were non-competitive, and that only 17% of the $3 billion in business grants awarded over the five-year period were competitive.

“Our members deal with small business every single day from the suburbs to every region in Australia; they see the struggles small business owners face. It is critical that the government recognise the vital role small business plays and the very real challenges they have. When small business is struggling, Australia is struggling. They need assistance now to remain viable, or they’ll become history,” Mr Conway said.

For a full copy of the research whitepaper, visit: grants research paper.