The National Retail Association (NRA) and the Australian Retailers Association (ARA) have both welcomed the Federal Budget 2023-24 - but warned more needs to be done to combat the rising cost of doing business.
The retail associations endorsed the Small Business Energy Incentive, which, according to Budget papers, will provide $310 million in tax relief and support up to 3.8 million businesses.
It includes the continuation of its $20,000 instant asset write-off, where small businesses with annual turnover of less than $10 million will be able to immediately deduct eligible assets costing less than $20,000 from July 1, 2023 until June 30, 2024.
ARA CEO Paul Zahra said while the scheme is a positive for retailers and the environment, energy costs are only one piece of the puzzle.
“We’re ultimately experiencing a crisis in the cost of doing business, and small businesses are bearing the brunt of this. Energy costs are just one of the higher costs of inputs that businesses are currently managing. Businesses need more support managing higher labour, leasing and supply chain costs as well as insurance.”
Regarding the instant asset write-off, NRA CEO Greg Griffith said this is a measure that supports retailers in investing in their own businesses while also seeing the benefits of additional spending by other businesses.
Zahra said cost-of-living relief was front of mind for everyday Australians and retailers.
“Australians are rightfully keeping a close eye on cost-of-living reprieve, but so too are retailers – with discretionary spending beginning to significantly soften in the wake of inflation and consecutive interest rate rises,” Zahra said.
“If small business is the backbone of Australia’s economy, the retail community is the beating heart. Alleviating cost-of-living pressures is a vital component of economic stimulation.”
Elsewhere in the 2023 Budget, Zahra welcomed the Government’s establishment of the Industry Growth Program, a $392.4 million investment that the Budget notes will support Australian small to medium-sized enterprises and startups to commercialise their ideas and grow their operations.
“This recognises the important contribution small and medium-sized enterprises make, and the role they play in transforming the Australian economy and creating new, high-skill jobs,” the budget read. “Support will be targeted towards businesses operating in the priority areas of the National Reconstruction Fund.”
Zahra said retail is one of Australia's most dynamic environments, “so this will help put some exciting new ventures on the map. We’re also optimistic about the potential for existing small businesses to share in this funding.”
The budget also outlined reforms around Australia's migration system to offer long-term pathways to residency for skilled workers.
According to the Budget, its migration system overhaul includes allocating around 70% of places in the 2023–24 permanent Migration Program to skilled migrants, providing an extra two years of post-study work rights to Temporary Graduate visa holders with select degrees, increasing the Temporary Skilled Migration Income Threshold to $70,000, and providing additional training places for Pacific Australia Labour Mobility scheme workers in priority sectors for the Pacific and Timor-Leste and where there are job shortages in Australia.
Zahra said the proposed migration overhaul would help address labour and skills shortages across the sector.
“The red tape of Australia’s migration system and the barrier of expensive childcare are two leading drivers of high job vacancies,” he said. “We are pleased to see the commitment to cut the cost of childcare for 1.2 million families – together these measures will have enormous benefits for retail and the broader economy.”
Zahra said the increases to JobSeeker payments, the added support for single parents and the 15% increase in wages for Australia’s aged care workers will be a welcome relief for vulnerable Australians, with flow-on benefits for the retail sector.
Meanwhile, Griffith said the NRA is waiting to seeing more details on the promised 300,000 new fee-free TAFE places, as well as additional investment in foundational skills.
According to the Budget, this initiative will assist students with cost-of-living pressures and support critical and emerging industries, such as the care, clean energy and digital sectors with the skills pipeline they need.
The Government is also negotiating with the states and territories on a new five-year National Skills Agreement to commence from 1 January 2024, adding this presents an opportunity to jointly set strategic priorities for Australia’s VET system, boost productivity, support gender equality and close the gap for First Nations Australians.
“The retail sector offers a start for every Australia, but the key to higher wages is the higher skills that can only come through training,” Griffith said. “Retail is one of the nation's largest employment providers, and should not be overlooked in allocating those places.”
There are also reports of skills shortages in the local design and manufacturing sector of Australia’s fashion industry.
“At a time when the cost of living is the number one concern for most households, the Budget delivers a timely and precise injection of financial support to those who need it most,” Griffith said. “This will result in greater confidence and stronger household expenditure, while in turn will boost small business owners and help them increase both pay and work opportunities for their employees.
Meanwhile, the Budget forecasts that inflation in Australia is past its peak, has begun to moderate and is expected to return to the 2-3% target in 2024–25.
“But,” the Budget reads, “price pressures will continue to weigh on households and our economy for longer than we would like.”
“The Government is delivering targeted cost-of-living relief that will directly reduce price pressures and the CPI by ¾ of a percentage point in 2023–24. Nominal wage growth has picked up and is expected to build to 4 per cent in 2023–24, its fastest pace since 2009.
“The lift in wages growth has been supported by the Fair Work Commission determination on the minimum wage and will be assisted further by the Aged Care Work Value Case.
“The combination of faster wages growth and lower inflation is expected to see an earlier and stronger return to real wages growth in early 2024.”
Griffith said the NRA is particularly pleased to see inflation projected to return to the Reserve Bank's target band, which he said should lead to lower interest rates and a boost to consumer confidence.