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Budget must prioritise SMEs: IPA
28 March 2022
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Small to medium businesses should be the focus for Treasurer Josh Frydenberg in his budget on Tuesday (29 March), said the head of the Institute of Public Accountants.
CEO Andrew Conway said confidence-boosting measures for the sector should be a priority for the government in the wake of bushfires, the COVID pandemic and the recent floods.
“Policies that help them hire, invest and innovate is what SMEs want and need right now,” Mr Conway said.
“SMEs have shown incredible resilience and agility. While government support has provided welcome relief and economic stability, the disruption of COVID-19 has taken its toll. Supply chain disruptions, staff shortages and inflation are biting.”
The IPA specified five focused initiatives to help SMEs bounce back.
Along with other accounting bodies, it called for the instant asset write-off to be made permanent beyond its current cut-off on 30 June 2023. Allowing businesses to deduct the full cost of an eligible depreciable asset “is a quick win”, it says.
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On the global energy transition, Mr Conway said SMEs were eager to embrace the opportunities but needed help to realign their operational strategies towards sustainability goals.
“They, like everyone else, are looking for guidance on where to start, but with significantly less resources to throw at this immense structural shift,” he said.
Mr Conway also called for government support for people aiming to retrain or switch careers, with tax deductions as an incentive. With the unemployment rate close to 4 per cent, skills shortages were becoming evident in key areas.
The export potential of SMEs is another area that could benefit from incentives, said IPA, as they underperform compared with large businesses.
“While SMEs make up around 88 per cent of all exporting businesses in Australia, they account for less than 4 per cent of the total value of exports,” Mr Conway said.
But companies that export are substantially more efficient, so incentives aimed at encouraging more small businesses to export “[have] the potential to provide a much-needed productivity boost”.
And finally, the IPA joined a chorus of calls for wholesale structural reform of the tax system to address the shrinking tax base, ageing population and budget repair.
Measures should include broadening the tax base away from a dependence on income taxes and incentivising the states to remove inefficient taxes, such as stamp duty and payroll tax.
“It is well documented that 90 per cent of total tax revenue collected by Australian governments is derived from only 10 of the 125 taxes paid by Australians each year,” the IPA said.
“Conversely, 10 per cent of tax revenue was contributed by the remaining 115 taxes.”
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