In September, we surveyed over 1,000 Australian small businesses to gauge the temperature and aspirations of the business community ahead of the 2020 federal budget.

Wish lists from small business owners are an important factor in evaluating whether the budget satisfied these hopes.

Make no mistake, this budget is one of the most important we’ve ever experienced. As Reckon’s CEO Sam Allert commented:

“This Federal Budget is like no other in recent memory. In the 20th century, Australia saw Federal Budgets announced following the Great Depression and World Wars I and II that permanently changed the way the economy was run. Budget 2020 is the first Federal Budget this century where we are seeing the same.”

What were the top 5 budget priorities for small businesses?

An important yardstick to measure budget success and reception is to look at the priorities of small business coming up to the budget announcement.

Nationally, the top five budget measures on small businesses’ wish lists were:

  1. Job creation and unemployment reduction (74 per cent)
  2. Mental health support (69 per cent)
  3. Personal income tax reduction (68 per cent)
  4. Cash flow support (65 per cent)
  5. Access to professional advice (64 per cent)

1) Job creation & unemployment

Our survey revealed that job creation and combatting unemployment was top of mind coming into the budget release.

  • Three quarters (74%) of respondents wanted to see strong measures to prioritise job creation and keep unemployment low.
  • More than half (54%) of all small businesses surveyed are currently enrolled in JobKeeper. Of these, two thirds (66%) will continue to be enrolled in the extended JobKeeper program, which runs until March 2021.

Did the budget hit the mark?

The 2020 budget is looking relatively good in terms of addressing job creation and unemployment. Although JobKeeper will be cut, ‘JobMaker’ will be introduced.

  • JobKeeper will be reduced on January 4, 2021 to $1,000 or $650, depending on hours worked.
  • JobKeeper will be discontinued on March 28, 2021.
  • There has been a shift away from support for JobKeeper next year into a new focus on JobMaker.
    • JobMaker will increase job creation for younger Australians, who have been hit hard by the pandemic. Under the scheme, employers will receive a credit for each new job they create that hires someone between 16 and 35 years of age.
    • The JobMaker credit will be $200 per week for 16 to 29-year-olds, and $100 for 30 to 35-year-olds, and will be available until this time next year.
  • There has been a significant budget boost for industries such as manufacturing and infrastructure, which will support job creation and growth.
    • This includes $1.3 billion to establish the Modern Manufacturing Initiative, $107.2 million for supply chain vulnerabilities, $52.8 million for manufacturing modernisation and $30 million to improve competitiveness.

“Job creation and low unemployment are the number one priority for small businesses with this Budget, so it’s safe to say that small businesses strongly welcome the Government’s JobMaker agenda aimed at supporting the creation and protection of jobs,” Sam Allert.

2) Mental health

Mental health support emerged as a top priority for small business across Australia, especially in hard-hit Victoria. Business closures and community restrictions have hammered small businesses and the mental health effects of this can’t be understated.

  • More than 2 in 3 (69%) small businesses think the Federal Budget should address provisions for small business mental health support.

Did the budget hit the mark?

Most business owners should be pleased with the significant investment in mental health within the budget.

  • In a welcome move, the budget revealed that there will be a $5.7 billion increase to mental health services for 2021.
    • This includes $4.3 million to provide free mental health support to small businesses.
    • In a state-specific move, there will also be $47.3 million to ensure additional mental wellbeing support in Victoria.

“As a nation, we’re becoming much better at recognising the importance of delivering mental health support to the community, so it’s excellent to see the Government has announced additional mental health support for FY2021,” Sam Allert.

3) Personal and business tax reduction

Personal income tax reduction ranked higher in the budget wish list than even company tax breaks, and we see both occurring in this budget.

  • Lowering personal income tax rates to encourage consumer spending is small businesses’ most wanted tax-related budget measure, with more than 2 in 3 (68%) hoping to see this in 2020.

Did the budget hit the mark?

There were indeed significant positive changes to personal income tax as well as business tax relief this year, which will benefit every tax paying Australian as well as many small businesses.

  • Low- and middle-income earners will receive tax relief of up to $2,745 for singles, and up to $5,490 for dual income families, compared with 2017–18 settings.
  • There have been significant changes to tax brackets to reduce bracket creep and extend benefits.
  • Tax reduction on business losses is also in play. Companies can offset tax losses against previously taxed profits to generate a refund. This will assist businesses who struggled through COVID-19 related losses.
  • The government is expanding access to a range of tax concessions for small to medium businesses by lifting the annual turnover threshold from $10 million to $50 million, providing tax relief and reducing red tape for businesses.

4) Cash flow

Cash flow is the lifeblood of a business and, unsurprisingly, this was high on our small business wish list leading into the budget.

  • Two thirds (65%) of small businesses prioritise seeing cash flow support from the budget, particularly in the form of payments to boost cash flow.

Did the budget hit the mark?

There were several measures announced which will positively impact cash flow and will be welcomed by the small business community.

  • The instant asset write-off has been boosted yet again in the form of ‘temporary full expensing’, which will increase both cash flow and small business investment.
    • From budget night until June 30, 2022, businesses with a turnover of up to $5 billion will be able to deduct the full cost of an eligible asset in the first year it’s used or installed.
  • There’s strong investment in ‘digitisation’ within the budget which will help small businesses reduce costs and man hours around business processes, freeing up cash.
    • The budget includes $120 million earmarked for measures to help businesses adopt digital technologies, of which almost $25 million will specifically help transition small businesses into the digital economy.

“It’s good to see that cash flow support for businesses has been explicitly considered in this Budget, especially given cash flow concerns have long been an issue for the Australian small business sector,” Sam Allert.

5) Access to professional advice

In a time of financial insecurity, access to professional advice (and support to do so) was high on the agenda of small businesses across the country.

  • Almost two thirds (64%) of respondents want to see grants for small businesses to seek professional financial or business advice.

Did the budget hit the mark?

It’s unlikely that business owners will be satisfied with the budget response to this concern. There were no new provisions or announcements around business advice grants or incentives.

 “Advice from accredited professionals means peace of mind for small business owners who have to navigate a fast-changing tax, business and regulatory landscape. As one of the top five items on the Budget 2020 wish list, small businesses will no doubt be disappointed to see that the Government has not made provisions on this front,” Sam Allert.