Entrepreneurs and business owners will be very pleased to see that Federal Treasurer Wayne Swan has not forgotten them in his Great Recession budget.
The decision to increase the small business tax break from 30% to 50% on assets purchased before the end of 2009 is a good one: it supports growing businesses through a difficult period and will stimulate the economy by bringing forward capital investment.
An extra $65 million for R&D tax concessions will also be welcomed, although the fact that the Government has delayed a new R&D tax credit scheme, (that it claims will double the level of assistance available to business to $1.4 billion), will not be so warmly received.
An extra $50 million for the much-loved Export Market Development Grant scheme should be applauded and entrepreneurs will even like the $10 million Small Business Support Line, a referral service that will help SMEs deal with issues like cashflow, financing and marketing.
Small businesses were walloped in last year’s budget, with almost $1 billion of entrepreneurial assistance measures slashed, including the $700 million Commercial Ready scheme.
At face value, the fact that this budget contains specific measures to assist small business is a positive step forward from the Rudd Government.
But it won’t take long for entrepreneurs to realise they are paying a big price for these initiatives in the form of changes to the private health insurance rebate and superannuation system.
Swan has made no excuses for asking high and middle-income earners — a group that includes thousands of small and medium business owners — to contribute more “because they can afford to do so”. He says this is a budget about creating jobs, building infrastructure and position Australia for economic recovery, and hard choices must be made.
Entrepreneurs could swallow this argument if only Swan had backed up his words with action.
Yes, there is plenty of money for infrastructure. Yes, there’s a bit of cash for business assistance. Yes, there is welcome spending on health, education and training.
But the biggest budget initiative for 2009-10 — at a staggering $2.7 billion, three times larger than any other single spending measure — is a $30-a-week increase in pensions for seniors, carers and people with a disability.
These groups are undoubtedly worthy recipients of more money. But make no mistake — they do not create jobs, they will not have any influence on the kick-starting the economy and they will not help “position us to capitalise on the global recovery when it comes”.
In a year when recession is imminent and the Government desperately needs entrepreneurs to help get the economy moving again, throwing $2.7 billion at pensioners, ($14 billion over the next four years), does not look like a smart move. Slugging these entrepreneurs for over $1 billion next year looks even dumber.
In his second budget speech, Wayne Swan correctly described small business as “the backbone of the Australian economy, employing around half of all private sector workers”.
Small business owners will be pleased the Rudd Government has recognised their importance, but they should be angry that they have been slugged and an opportunity wasted.
The implied argument that seniors, carers and people with disabilties will place their $30 a week under the bed is codswallop. On the contrary, the money will circulate immediately and although it may not create jobs directly it will certainly do so indirectly by increasing demand for goods and services. Linking this budget initiative to the supposed detriment of entrepreneurs is a non sequitir.
Brendon Jarrett.
It was all going well until the tired old neo-con economics reared its ugly head. When will these commentators get with the game – the new right/neo con/economic rationalist/etc experiment FAILED! Those not suffering from economic myopia picked it years ago; it would all end in tears. Most did not predict just how disastrous it would be. Rather than trotting out the same old complaints about social spending acknowledge you were wrong and apologize to the world.
Does any one really think that an extra “staggering $2.7 billion” will not find its way into the economy? The stench of self interest is getting a little tiresome. It’s time for recalcitrant neo-classical economic commentators and their heroes to find a big stone to hide under in terminal (I hope) shame.
Peter roguszka
Just love the comment “paying a big price for these initiatives in the form of changes to the private health insurance rebate and superannuation system” I didn’t realise these were business issues. On the other hand and without having read the budget detail, it seems that a tax break of 50% on asset purchases and increased R&D concessions are pretty attractive. Yes, the Commercial Ready Scheme was scrapped last year but it was replaced by Climate Ready Scheme. In my small business I take advantage of traineeships, export assistance, R&D concessions, subsidised advice, an excellent AusTrade, and a range of other assistance measures. When I sell the business I will receive tax concessions on the capital gain. Whew. Begrudging a rise in the pension while having a bitch about way overdue reform of superannuation and health subsidies is a bit rich.
Are you saying that high-income individuals who own businesses are prevented from reinvesting their income into their own businesses now the subsidy for their private, personal health insurance policies and superannuation funds has been reduced, and now that those of their neighbours and customers who are pensioners are getting a few more crumbs each week to put on the table?
What tommy-rot.