Budget time again. After scouring through the papers and online material, there aren’t a lot of surprises this year. The government has delivered a pretty basic budget promising to get Australia back in black by 2012-13. There are many facets of the budget, but here I have focused on small business and working families.
SMALL BUSINESS
Addressing a Skills Shortage “Building Australia’s Future Workforce” includes the establishment of a $558m fund to provide training opportunities for up to 130,000 skilled workers. This should help small business address the recurring problems of finding qualified skilled staff. Lower Tax Rate Small businesses will be able to access a reduced 29% tax rate in 2012-13. The lower tax rate will free up profit which may be used to grow the business. Lower PAYG installments Reduced PAYG installments will benefit a majority of small businesses, providing $700m of additional cash flows in 2011-12. This will benefit approximately 2.7m small businesses. Depreciation Changes From 2012-13, small businesses will be allowed to have enhanced depreciation allowances for motor vehicles. They will be able to claim up to $5,000 as an immediate deduction. For the first year, they can also claim 15% of the remainder. For subsequent years, the 30% depreciation rate is maintained. The enhanced deduction for motor vehicles, a key asset for most small businesses, will lead to lower taxable incomes, and thereby a reduced tax due for small businesses. Small Business Support Line The ‘Small Business Support Line‘ will continue with an additional $7.1m of Government funding. Advisor Finder The recently launched ‘Adviser Finder’ tool will help small businesses to better access assistance from the Enterprise Connect Centres and the Business Enterprise Centres.
WORKING FAMILIES
$150,000 household income is now the welfare threshold. The budget has extended the freeze in the indexation of income limits on family payments including Family Tax Benefits A and B, the Baby Bonus and Paid Parental Leave until 2014, which will save the government more than $1 billion over the next four years. This means that during the first year of the new rules, 31,000 families will no longer be eligible for Family Tax Benefit A and a further 9,000 will not receive Family Tax Benefit B. Basically any family earning at least $150,000 will no longer be eligible for this government assistance. The budget also defers the introduction of paid paternity leave from July 2012 to January 2013. All of these cuts will clearly negatively impact working families, and put a greater pressure on families to make ends meet.
SUMMARY
Overall, I believe the government has delivered a basic “do the job” budget. There is a needed investment in workforce skills, which will have a flow on effect to small business, but overall, there is generally not enough support for small business. And working families, with the exception of families with 16-19 year olds in education or training, are mostly worse off as a result of this budget. One area that I applaud: a $2.2b package over five years to tackle mental health issues. One of the very few bold moves made by the government on this budget.
