Yesterday evening, Federal Treasurer Josh Frydenberg handed down the Budget for 2022.
To read about the measures that will impact businesses, click here.
Here, Ragtrader presents the reaction of the business sector.
What are your thoughts on this year's Budget? Leave your opinion in the comments below.
Premier Investments chairman Solomon Lew
I commend Treasurer Frydenberg and the Morrison Government on the 22-23 Federal Budget, delivered against a challenging backdrop of geo-political tensions, the pandemic, rising inflation and low unemployment.
The budget delivers immediate cost-of-living relief to millions of Australians, and continues investment in crucial areas including infrastructure, health, education and defence.
It is a sensible, balanced and stable budget that highlights our nation’s economic resilience, prioritises investment for the future and ensures we maintain our triple A credit rating.
National Retail Association CEO Dominique Lamb
Consumer cash flow is the lifeblood of many small retail businesses, and fuel excise cuts and cash handouts will help counteract the steep revenue drop experienced at the beginning of the year.
The Budget is taking steps towards economic recovery for the businesses and people heavily impacted by the effects of the pandemic.
The retail sector is one of the nation’s largest employers, and has the potential to drive the economic recovery if there are enough skilled workers.
Often retail is overlooked, so we call for training resources to be focused on the retail and hospitality sector in the year ahead.
Australian Retailers Association CEO Paul Zahra
Business costs are increasing, as staff shortages and supply chain delays and costs continue to bite, and we are pleased to see the government recognise the immediate inflationary pressures on vulnerable Australians which will have a flow-on benefit to retailers.
However, business disruption remains an ongoing concern for Australian companies large and small with the conflict abroad creating a ripple of cost pressures for retailers and customers, and at home flooding has displaced thousands of Australians and impacted many businesses.
Small businesses feel these impacts more given they do not have the same level of resources or cash reserves to cope with the uncertain economic environment and we are pleased to see this addressed in the Budget.
Retail is Australia’s largest private sector employer, and with the sector undergoing profound labour shortages and a skills deficit, it’s important the training measures apply to retail employers both large and small.
Whilst we recognise the merits of the government’s recycling modernisation fund, there remains enormous opportunity for growth in how we as a nation address climate change and sustainability challenges – which is Australia’s biggest disruptor.
The ARA would welcome more measures to address business adaption and resilience to the impacts we are already experiencing around natural disasters such as flooding and bushfires as well as educational measures for business on sustainability adoption.
While the Budget provides much needed relief in the short-term, by the way of tax offsets and cash payments, strategic challenges remain for the medium to long-term which must be urgently addressed if we are to retain our social and economic resilience.
We cannot have an economic recovery without a retail recovery.
Pitcher Partners national chairman John Brazzale
There’s nothing in this Budget that will stand in the way of business but there’s equally nothing that provides a strong incentive for investment or action.
Unlike other recent budgets, there’s very little to get the pulse of business racing.
The cap of $100,000 for digital transformation will be set too low for most businesses, given the cost of investment required to introduce new systems or software.
There is also the concern that if the application process is too complex then the 20% bonus will be rapidly eroded.
After several Budgets in which support for business was a key feature, and which very successfully saw the economy grow, on the back of private investment and hiring, this Budget marks a much more subdued level of support.
More importantly, there was no appetite for structural reform or long-term changes that create the climate for more significant business investment.
Given the headwinds of renewed COVID cases, flooding across NSW and Queensland, the war in Ukraine, cost of living pressures, labour shortages and inflation, it would have been good for business to receive the right signals to drive confidence.
After two difficult years, the Government might want to step back but business cannot — it is still doing the hard work of keeping the economy running.
This Budget leaves business to continue that work alone.
NAB
With the looming election and the promise by the Opposition of a new budget if elected, there is considerable uncertainty over how many of the announced measures will be implemented.
We also don’t know what else the Government will announce in the lead up to the election (although the Contingency Reserve which widens to $15.4 billion by 2025-26 is pointing to some further announcements).
That said, the focus of spending was largely as expected.
Cost of living measures were a centre piece, including halving the petrol excise for six months (worth 22c per litre), an extra $420 on the LMITO, and one-off special payment of around $250 for pensioners and welfare recipients.
Other measures included tax benefits for SMEs to invest in training and technology and an extension and expansion on home loan guarantees for housing.
Our analysis of the Structural Budget impulse using OECD methodology points to, very little structural tightening over the forward estimates – with the structural position improving by only 2% of GDP over the next three years.
This sees the structural deficit still around 5% of GDP by 2024-25. Indeed, the small reduction in the headline Budget was largely brought about by a better economy – we think more could have been done.
In looking at the near-term trends, the fiscal situation is once again driven by the expense side rather than revenue.
Indeed, compared to MYEFO there is little change.
Overall, we have no problem with the focus on maintaining the support for economic growth but we see the scope for more structural/productivity enhancing measures to have been included.
Further measures that cut red tape, reform taxation and provide greater support for renewable energy would have been welcomed.
This budget also does not change expectations for monetary policy – i.e., the RBA will move soon to moderately increase rates (we expect that process to start by August this year).
The Council of Small Business Organisations Australia CEO Alexi Boyd
The Government should be highly commended for its commitment to reducing the regulatory burden on small business people, making their lives easier as they focus on recovering from the effects of pandemic restrictions.
Supporting small business is so important.
We’re at a time where we risk losing small businesses to the accumulated pressures of the last few years.
The loss goes beyond jobs and other economic indicators. Small businesses are essential contributors to culture, community, and the history of a place.
Neighbourhoods and towns are often identifiable by the unique mix of shops, cafes, and other small businesses that line their high street.
If a small business is lost, part of its community is lost with it.
H&R Block director of tax communications Mark Chapman
The expanded low and-middle-income tax offset for this year is welcome.
People earning up to $126,000 will get a rebate of $420 in excess of what they would have got any way through the existing tax offset.
Unfortunately, this is just a short-term measure.
Next year, the low and middle-income tax offset disappears completely - meaning that people earning up to $126,000 will see a tax rise of up to $1,080.
It's hard to see how that will do anything to help cost of living pressures over the medium and long term.
Worse, just as most Australians will see this tax rise, the wealthiest Australians will be anticipating a tax cut of up to $9,075 in 2024/25.
Meanwhile, there are two key measures for small business in this budget but no word as to whether the 'Temporary Full Expensing' tax break - which benefits almost all businesses with the instant write off of capital purchases - will be extended beyond 30 June 2023.
The main headline grabber is the Technology Investment Boost, which gives businesses with an annual turnover of less than $50 million the ability to deduct an extra 20% of the cost of expenses that support their digital uptake.
Businesses will be able to claim the additional deduction on up to $100,000 of expenditure a year.
The tax break will apply to any purchases made between 7.30pm March 29, 2022 and June 30, 2023.
In addition, there will be a similar tax break for small business that fund digital training and upskilling for staff.
The Skills and Training Boost gives a small business that spends $100 on training employees a $120 tax deduction. This also came into effect 7.30pm last night, but will extend until June 30, 2024.
