The overall structure of the Federal Budget 2022-23 appears to have been designed not to offend any voter in the electorate. To this end, it could be said that the Budget lacks a constructive and meaningful push for greater innovation or efficiency within the business community. However, in its defence, the Budget handed down may be founded on the mantra of not interrupting the current endeavours of businesses to make their way through challenging headwinds.
In an increasingly volatile world, and with an election just around the corner, the 2022-23 Federal Budget offered little to surprise or offend business and other stakeholders. The opening remarks of the Federal Treasurer’s budget speech confirmed that its key themes are built around maintaining Australia’s strength and resilience whilst we continue to “live in uncertain times”.
The government is clearly hoping for the continuation of economic growth, although moderated in recent years in the rebound from the COVID-19 pandemic, continuing to project low unemployment and very rapid controlling of current inflation expectations. This environment, they believe, does not need interference (aside from some temporary measures such as the fuel excise reduction) and in their view, ‘leaving well enough alone’ appears to be the greatest hope of restoring budgeted revenues without structural policy change.
In practice, this means that many of the proposed Budget measures, whilst helpful for some, are unlikely to provide widespread support for business as the JobKeeper program becomes a distant memory and the capital expenditure incentives of past budgets move into run-off phase over the coming year. But pleasingly, at least, there aren’t any new measures that should distract businesses from endeavouring to tackle the labour supply, resourcing, supply chain and cost issues that exist and will continue to lie ahead.
As always, there are opportunities for astute business owners and managers to whom some of the specific measures are directed. Some of the key impacts for businesses and stakeholders across Australia, if Budget measures become law, include:
- Small business training and technology boost incentives, broadly providing a 120% tax deduction for eligible expenditure;
- Important expansion of the Employee Share Scheme rules to encourage talent reward and retention in unlisted companies;
- Expansion and clarification of the patent box measure, providing a concessional company tax rate on eligible income;
- Temporary relief measures in the calculation of PAYG and GST instalments for smaller businesses; and
- Temporary reduction of fuel excise tax by $0.221 per litre.
It is difficult to see that there would be any challenges to the Budget measures in the face of an upcoming election. Furthermore, it is almost inevitable that there will be further policy announcements in the coming weeks from both sides of politics, which will further supplement this Budget.
With this opportunity to influence policy still alive, Pitcher Partners will be advocating on behalf of the middle market for the next government to, among other things, support the growth of skilled labour market participation, focus on meaningful, sensible tax reform, and more investment to further develop value-adding industries for Australia’s future.