Federal Budget 2012: Business groups welcome budget surplus but question long-term vision
Business and industry groups have welcomed the Federal Budget’s return to surplus but have questioned Treasurer Wayne Swan’s long-term vision for enterprise, with the decision to dump the promised company tax cut provoking ire.
While there’s plenty of criticism, there’s also praise for some of the smaller, albeit less significant, measures.
Here’s what they had to say:
Australian Chamber of Commerce and Industry
ACCI chief executive Peter Anderson said while the budget is “ambitious” with regard to repairing government finances, it lacks vision for the broader economy.
“It is… limited in its support for the economy, and spoilt by its intention to proceed with the carbon tax and failure to deliver the promised company tax cut,” he said in a statement.
Anderson said the decision to abandon the company tax cut is “dripping with politics” and a low blow to the businesses sector given that the mining tax has already been legislated.
“There is a $400 million loss to business when the value of the company tax cut is compared to the gain of the loss carry-back scheme,” he said.
Having said that, ACCI welcomes the introduction of the loss carry-back scheme.
It is also pleased about the funding for tradespeople to upskill into their own business, which was an ACCI proposal.
Australian Industry Group
AIG chief executive Innes Willox said while the return to surplus is a welcome move; there are “considerable risks” in the way it has been achieved.
“In particular, the additional taxes and costs imposed on industry will undermine the ability of business to make the critical longer-term investments needed to boost productivity, improve our global competitiveness and lift employment,” Willox said in a statement.
“The scrapping of the company tax cut that was to be financed from the Minerals Resource Rent Tax is a major blow to business.”
“It will reduce incentives to invest and innovate, and is a particular setback for businesses in non-mining, trade-exposed industries such as manufacturing.”
Meanwhile, Willox said the loss carry-back measure will provide some benefit to business, but not immediate relief. He is also displeased with the living-away-from-home scheme changes.
“The changes to the tax treatment of living-away-from-home allowances and benefits will exacerbate the difficulties for business in attracting highly-skilled employees to fill positions away from their home,” he said.
However, Willox said there are a number of positives in the budget, including the Government’s plan to establish a Manufacturing Technology Centre.
Australian Retailers Association
The ARA says while the budget offers “some relief” to businesses and households, it doesn’t go far enough in providing long-lasting support for the struggling sector.
“ARA supports the announced tax loss carry-back scheme, but would like to have seen further initiatives to help retailers focus on growth,” president Roger Gillespie said in a statement.
According to Gillespie, the Government’s decision to scrap company tax cuts shows it is financing a return to surplus by penalising businesses.
But, as he pointed out, it’s not all bad.
“Retailers will benefit from inclusions such as… the extension of the Small Business Advisory Service, which will ensure more retailers receive timely assistance,” he said.
“Retailers will also benefit from the relief provided to low to middle income households through Family Tax A and the Schoolkids Bonus.”
Council of Small Business of Australia
COSBOA chief executive Peter Strong has described the budget as “neither here nor there”, although there are a handful of things he’s pleased about.
“I’m very happy [about the establishment of an Australian Small Business Commissioner]. Even though we knew it was coming, it was just a great moment,” Strong told StartupSmart.
“For 20 years we’ve been trying to get one, so it’s very, very good – I’m very pleased.”
Strong says he’s not overly disappointed about the absence of a company tax cut, saying it’s “not a small business issue”.
He is, however, disappointed the budget missed an opportunity to target red tape, and failed to offer a clearer definition of small business.
But he was happy about the $19.4 million set aside to further the training of newly qualified tradespeople, describing the measure as a “hidden little gem” in what was a fairly ordinary budget.
“It was out of left field – I quite liked that,” he says.
“Lots of people who come out of their apprenticeship end up being independent contractors because of the nature of the industry.”
“$5,000 [grants] to help them get it right – you can’t say that’s a bad thing.”
Institute of Public Accountants
According to the IPA, the Government has overlooked the needs of small business by not providing any relief in reducing the overall burden faced by the majority of small businesses.
“Last week’s announcement that businesses will be able to carry back up to $1 million worth of losses and offset it against the previous profits was a welcome relief,” IPA chief Andrew Conway said in a statement.
“However, this measure doesn’t go far enough – it doesn’t benefit profitable businesses or provide immediate relief.”
“Unincorporated small businesses, which make up over 66%, will receive no relief.”