The results are in and what is most apparent is small and medium-sized businesses are divided over the Federal Government’s management of the economy, with many feeling decisions aimed at the sector are missing the mark.
Just a third of respondents believe reducing the corporate tax rate to 25% is a top priority for supporting businesses, compared to two-thirds who see value in cutting red tape, while only one in four said such a tax cut would be used to employ more staff.
While just over half of those surveyed agreed the government was managing the economy well, 39% felt quite differently – deeming economic management poor or very poor. The overall sentiment; the Federal Government could be doing more for small to medium businesses, which represent the engine room of the Australian economy.
Some 61% of those who completed the survey ranked simplifying the tax system as one of the top priorities for the 2018-19 budget, followed by a desire for government to implement measures to promote small to medium businesses (54%).
When asked what the government could do to assist SMEs, 66% of respondents cited “reducing red tape,” followed by “further reducing the corporate tax rate to 25%”. Many also showed support for extending the instant write-off for assets under $20,000 past 30 June 2018.
While the government insists businesses will use a tax cut to employ more staff, findings show it is just one of their priorities. When asked what our clients would spend a tax cut on, 24% indicated would employ more staff, but 34% said would invest in plant and equipment, and 31% would reduce company debt.
Interestingly, 20% of respondents indicated they would apply the savings to research and development, even though as few as 10% currently claim R&D tax incentives. This may indicate R&D is one of the areas of red tape our clients want reduced.
More than 71% of respondents believe they have a “good understanding of superannuation rules and impacts,” but also thought the public’s trust in the system had eroded, principally due to the history of constant tinkering with the system, and most recently the imposition of significant restrictions to growing super balance.
Looking to the year ahead, we asked our clients about expected changes to the inputs and outputs of businesses.
Most SMEs were optimistic about future growth prospects, with a general expectation for a stable and gently growing economy. Economic stability is expected to lead to wage costs rising for 65% of business, and 80% of respondents expected staff numbers to remain the same or increase.
There is a clear message here for the Federal Government heading into this Budget and indeed for the rest of its term: give business the architecture to succeed.
You’ve asked for structural investments that assist the economy in its transition to being internationally competitive and supporting highly skilled jobs that require a technologically literate workforce - and then you’ve called for the government to get out of the way and let business your businesses do what they do best.
Summary of key findings:
- We surveyed 205 of your businesses across a range of sectors
- 61% of you ranked simplifying the tax system as one of the top five areas of priority for the forthcoming 2018-19 Federal Budget, followed by a desire for government to implement measures to promote SMEs (54%).
- 61% of survey respondents believe the current government is creating a business-friendly economic environment “some of the time”, while almost 15% of you said “not at all” to the same question.
- 66% of you cited “reducing red tape” as a key measure the government could do to support business, while 36% cited “further reducing the corporate tax rate to 25%”.
- Many of you showed support for extending the instant write-off for assets under $20,000 past 30 June 2018.
- Those of you eligible for a lower company tax rate were divided about how you would utilise tax savings: 34% expected to invest in plant and equipment, 31% would reduce company debt and 24% would employ additional staff.
- A further 20% of indicated you would apply the savings to research and development, but only 10% of you currently claim R&D tax incentives.
- 65% of respondents expected wage costs to rise while 80% of respondents expected staff numbers to remain the same or increase.
- Supply chain cost pressures meant an estimated 45% of you expect to increase the price of your goods and services this coming financial year.
Most respondents expected economic conditions to remain stable or increase slightly, with the exception of unemployment which had you divided.
Stay tuned for our coverage of the Federal Budget 2018-19.