What businesses want from the 2020 Federal Budget
Over 750 SMEs share their views on the future of business.
With almost every industry affected by COVID-19, Australian businesses have been tested as never before. The virus and subsequent containment measures have driven significant changes in the attitudes and behaviours of customers, employees and businesses alike. While some have continued to operate as normal (and even thrive), others have been heavily impacted with pressure on profitability and cashflow, temporary or permanent business closure. Against this background, for many businesses this will be the most important Federal Budget in their lifetime. In Part 1 of this Special 2020 Federal Budget SME Insight Series, NAB explores the key concerns of Australian businesses, what needs to change to improve confidence, strategies being employed to remain viable, what policies would be most beneficial to business, and which taxes and regulations should change. Over 750 businesses across the country shared their views.
While COVID-19 remains the key concern, with many parts of the country reporting minimal active cases business anxieties regarding the virus have decreased from earlier in the year. While all industries have been hit by the pandemic, the toll has been greater in the hospitality sector, along with parts of transport and storage and retail. COVID-19 has hit Victoria particularly hard, but all states and territories have been impacted.
Business confidence has been improving in recent months but is still negative. Not surprisingly, business sees less disruption from COVID-19 as key to restoring confidence, along with improvements in consumer spending and demand, government policy and regulation changes, and reduced business compliance costs. There are however key differences by business size. Around twice as many medium firms identified suitable labour availability than small and large firms. Noticeably more small and medium firms pinpointed improvement in consumer spending, whereas more large firms saw improvement coming from changes to government policy and regulation.
When asked about other key areas of concern, business owners raised a number of additional issues including: state border closures; challenges of shifting to online platforms; general uncertainty making planning difficult; interruptions to supply chains; employee retention; cybersecurity; rising costs of redundancy; making ill-informed decisions due to panic; increasing delivery and inventory costs; restrictive limits on the number of people allowed to work; rising mental health issues; ensuring customers abide by COVID-19 protocols; customers entering into contracts no longer able to fulfil; accessing appropriate PPE; and abusive customers.
Around 3 in 10 businesses expect to have to restructure their service or product offerings to meet changing needs in the next 12 months (ranging from 27% of small firms to 41% & 51% of medium and large). Almost 3 in 10 small firms said nothing was required (10% of medium & 7% large). Almost 1 in 10 businesses believe they will have to close permanently, with retail and telecoms businesses most likely to take this action. Cost reduction will also be key to moving forward, along with cutting staff and wages.
While Government stimulus packages have helped, businesses are calling for more assistance. The responses were both expected (lower taxes please!) and unexpected (relatively less appetite for regulatory change). And, a “one size fits all” approach to business support is not what is needed. Small businesses favour cash payments, while larger business is more concerned about ongoing wage and entitlement subsidies. Rental relief is a bigger priority for small and medium-sized firms. Medium-sized firms believe they will benefit more from underwriting of loans by government for affected businesses, part payments for staff stood down and tax deferral.
Australian businesses overwhelmingly want lower taxes, particularly personal and income tax for low-middle income earners, followed by payroll tax. More specifically, hospitality operators are calling for the scrapping of FBT and less tax on alcohol, tourism operators want lower taxes on travel, smaller businesses in general a reduction in land tax, stamp duty, road tolls, costs for major projects, council rates, fuel, registration charges, Work Safe, Superannuation Guarantee increases, FBT exemptions, and for sole traders, taxes reduced in-line with small business.
Finally, some of the regulatory areas businesses believe need urgent review include: COVID-19 gathering limits; extensions to JobKeeper/JobSeeker; loss carryback provisions; credit access; insolvency/restructuring of debt; minimum wage requirements, casual pay rates, penalty rates & termination rules; superannuation increases; OHS complexity; ATO monthly reporting & tax lodgement deadlines; public liability; community consultation laws; foreign student entry, migration laws & support for those on working visas; environmental regulations; foreign investment rules; licencing, practicing certificates and internal audits; liquor licensing; planning permits and local council delays; operating hours; access to government funding and grants; restrictions on events; Medicare levies; animal exports; tenancy laws; and cyber security regulations.
For all the details, download our 2020 Federal Budget SME Insights.