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CPA Australia nominates its priorities for the Treasurer to kick-start the recovery.
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Small business ‘needs triple-pillar of Budget support’
29 March 2022
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Full expensing, advice vouchers and accelerating the take-up of digital technology should be top of the list of budget measures aimed at small business, said CPA Australia.
Gavan Ord, senior manager business and investment policy, said chief among the targets should be support for small business to embrace digitisation.
CPA Australia’s recent small-business survey showed we lag our counterparts in Asia on take-up of digital technology and government needed to oil the wheels, he said.
“We find that businesses don’t know what technology exists or if they do, they don’t know how to apply it – particularly for people who run micro-enterprises and the owner might be 50 or over,” Mr Ord said.
“So we do see a role for government in terms of incentivising business to invest in technology and also providing information.”
He said there was a strong statistical link between technology adoption and growth.
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“Year after year, the data shows high-growth businesses are statistically more likely to be using technology. They are also significantly more likely to be adding to their headcount,” Mr Ord said.
“So we think one of the key ingredients in helping businesses grow is helping them become more digital.”
For a small company, having the right software is just the start and online sales are only part of the answer.
“Online sales are only partially replacing traditional sales so it’s helping them keep their head above water, it’s not actually generating the profits,” Mr Ord said.
Mr Ord expected the budget to deliver something on technology support because of the government’s strategy to become a top 10 digital economy in 10 years. But Asia would still lead the way.
“Our competitors are putting a lot more money into helping the SME sector succeed in this digital environment than we are,” Mr Ord said.
“If we are to achieve that top 10 status, I don’t think the current policy settings will get us there. It’s based on a lot of hope that the SME sector will just adopt the technology and the data keeps showing that’s just not the case.”
Second on CPA Australia’s budget wish list is direct support for advice to small business using the existing network of accounting firms.
Its pre-budget submission has a voucher scheme as its first recommendation: “To support small businesses through the ongoing and evolving challenges of covid-19, the government should provide small business financial incentives to access tailored advice from approved advisers of their choice.”
Mr Ord said surveys revealed that when businesses get into trouble, they become less likely to seek advice and that could become a vicious circle.
“Obviously, if you’re not seeking advice, the risk of mistakes piling on mistakes becomes higher – not just to the business’s owner, but to its employees as well,” Mr Ord said.
He said the cost of advice was the main thing holding troubled businesses back.
“I think they become concerned about the cost of advice when they start getting into difficulty,” he said. “I think government can help by at least addressing that cost factor through a voucher,” Mr Ord said.
He said state government advisory services lacked the ability to engage in the right way and most businesses already turned to accountants for help.
“Our small business survey shows 40 per cent of people in Australia sought advice from an accountant in the last 12 months, and 8 per cent sought advice from government,” Mr Ord said.
“So if you want to maximise the impact of this project, you really do need to work with existing advisers.”
Setting the voucher value at $1,500 would give five to six hours of advice, he said, with about three hours necessary just to get a handle on the problems.
Mr Ord said a $1.2 million program in Tasmania showed what could be done and he was optimistic the budget would include some sort of scheme.
Last but not least, the third pillar of support centred on making full expensing a permanent part of the tax system.
Mr Ord said it would restore some certainty around planning.
“They extended the life of it by one year in the last Budget and I think they might extend for a further year, to 2024,” Mr Ord said.
“That’s a positive but as an adviser, you don’t want to have this will-they, won’t-they approach. It’s not creating the certainty that business needs.
“If they were to make it a permanent feature, they might then reduce the size of business that can claim it down to, maybe, $50 million.”
But it would still work as a growth measure.
“It encourages investment in assets, and those assets can help make businesses more efficient, more profitable,” Mr Ord said.
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