Labor’s second budget in 7 months focused on cost-of-living pressures, with modest concessions for the business sector in an equally tough economic environment.
The $392 million Industry Growth Program (a revamped version of the former government’s Entrepreneurs’ Program and Accelerating Commercialisation grant program, with increased funding), was the headline act. The program will support SMEs and startups to commercialise ideas and grow their operations.
Other key incentives for small business include:
- an instant asset write-off threshold of $20,000n (down from the pandemic era $150k) for 12 months from July 1;
- $325 off the power bills for one million eligible small businesses;
- tax incentive worth up to $20,000 to provide an additional 20% depreciation for assets that improve energy efficiency;
- $23.4 million for a cyber wardens program for small businesses to build in-house capability to protect against cyber threats;
- reducing the PAYG and GST uplift from 12% to 6% for 2023-24 income year, to assist cash flow.
- extra funding for the ATO for improved admin to assist small business, plus extending the period to amend income tax returns from 2 to 4 years.
- $18.1 million improve ability for SMEs to compete for government procurement
- $101 million for companies to integrate quantum and AI technologies into their operations.
Director, William Buck
“We’ve been forewarned that this would be an austere Budget and so it proves for the Australian tech sector – cuts made to the already anaemic Export Market Development Program, the canning of the proposed Patent Box tax concession, Digital Games Tax Offset still in limbo and a “new” $392.4 million Industry Growth Program which by all indications is just a re-branding of the previous Accelerating Commercialisation program which many founders know well.
“The $101 million over 5 years earmarked for quantum computing and AI is a step in the right direction albeit a small one, at less than 1% of what Microsoft invested into OpenAI. At a general SME business level, the instant asset write-off and 20% bonus tax deduction encouraging the green energy transition are nice but won’t move the dial for Aussie tech.
“We’d like to point out to the Government that some of the measures that founders really need actually place minimal stress on the fiscal balance – for example modifying R&D tax incentive to cater for agile software development and simplification of the employee share scheme tax rules for companies falling outside of the Startup Concession.”
Co-CEO, Pin Payments
“The best news for startups from this budget comes from its budget papers to establish a new Industry Growth Program worth $393.4 million to support Australian startups and SMEs to “commercialise their ideas and grow their operations.
“Investing in tech, startups and new business is critical right now to put Australia on par with other countries and to ensure our government is investing in local talent and businesses.
“It’s encouraging to see that the instant asset write-off threshold has increased temporarily by $20,000 for small businesses to assist with the investment in operations and to deduct the full cost of depreciable expenses from tax bills.
“However, this menial effort to support SMEs by Labor simply isn’t enough. Small businesses need much more support after years of economic hardship, in order to support more Australians in jobs and boost the economy.
“One exciting initiative for small businesses includes the investment of over $101.2 million over five years to harness quantum and AI tech. This incentive seeks to support improved business processes using AI, however the details surrounding how the government will do this still remain murky. We hope this policy will have concrete outcomes for businesses and not be a case of aspirational policy grandstanding.”
MD, Biztech Lawyers
“Our clients usually need two things more than anything else – capital and talent. We’re pleased to see the government include a measure in tonight’s Federal Budget to enable all temporary skilled workers to have a pathway to permanent residency by the end of 2023.
“This will go a long way towards enabling Australian startups to attract talent from overseas, but the industry still needs further action as the government prepares to release a final Migration Strategy later this year.
“The Tech Council of Australia is calling for employer-sponsored skilled migration to be prioritised, with fast pathways to permanency and increased labour mobility; arrangements for visa holders earning more than the average full-time salary for accredited sponsoring employers to be streamlined; and the administration of the skilled migration program to be internationally competitive. We think this is a great blueprint.
“While the government’s additional instant asset write off relief is welcome, we wonder if it would be better if these kinds of offsets were reserved for purchases of Australian technology. It looks to us like this will simply boost demand for international suppliers, as it normally does.
“Further to this, the government has outlined $91.7 million over four years to “transform program administration for schools and higher education providers by developing stable, secure and streamlined information and communications technology platform”. It’s a worthy cause, to be sure, but we have a client that already does this. The government should look to the private sector to find innovative Australian companies already getting on with the job of reinventing school administration.
“The Budget Papers outline how the Australian Skills Guarantee will apply from July next year to projects with contracts valued at $10 million or more in information and communications technology sectors.
“This will include sub-targets for women. The emphasis of inclusivity of women in project teams for large scale projects is to be applauded and can’t come soon enough. We hope the scheme is workable and pragmatic.”
GM, FinTech Australia
“While this budget clearly focuses on cost-of-living relief, fintech, and the innovation it can deliver to Australians, has not been forgotten.
“The government is providing funding to establish an Industry Growth Program to support Australian SMEs and startups to commercialise their ideas and grow their operations. This targeted funding will help early-stage fintechs weather difficult market conditions and continue to grow.
“We are pleased to see almost $90 million of new funding to support the operation of the Consumer Data Right, uplift cyber security and progress the rollout of action initiation. This is yet another cost-of-living measure in disguise, as when fully operational the CDR will spur on competition in energy, telco and banking services.
“The CDR is at a crucial point in its rollout and the Government playing a central and supporting role is more important than ever. It is a transformational reform which is yet to reach its full potential.
“Access to talent remains a significant challenge for Australian fintechs; in last year’s FinTech Census 85% of companies reported it as one of the greatest issues affecting the sector. Measures to improve visa processing times, improve pathways to permanent residency and invest in strengthening STEM skills are positive steps towards addressing this issue.
“Finally, the government’s new Sustainable Finance Agenda aligns with a growing trend of fintechs incorporating sustainability and positive impact into their business models. Ensuring integrity in sustainability claims and developing a new sustainable finance taxonomy will make it easier for fintechs to adopt these approaches.”
“This is a massive missed opportunity from the Federal Government to surge ahead in what is fast becoming the race to not only pioneer but leverage new AI technologies. In the US, Federal Government spending on AI is expected to hit $3.3 billion this fiscal year.
“In Australia, we’ve just allocated roughly $20 million per year, for five years, split across AI and quantum computing.
“It’s reasonable that this isn’t a budget for the tech sector, or innovation, given the sharp focus on cost of living. On any other topic, it’s right not to complain when thousands of Australians will be better off due to funds put towards welfare and support.
“But we can’t stress enough — as an AI company ourselves — this innovation is time-sensitive. By the time it’s a focus globally, it will be too late. There is a reason companies like Google, Amazon and Microsoft aren’t slowing down their progress despite ongoing debate on the power and ethics of AI.
“This is a Federal Budget that hits all the broad strokes incredibly well, covering all the bases for emerging business more so than its predecessors. Every notable issue is getting a mention. But it’s questionable if the funding tied to delivering progress on them will be enough.
“With EV policy, for example, only a mere $1.3 million per year is being committed towards creating a national EV infrastructure mapping tool. Around $1.8 million per year will be used to introduce fuel standards. Given the fanfare a few weeks ago regarding the national EV policy, we expected these figures to be higher and more of it to be cost.
Partner, Giant Leap
“Over the past few years, we have observed a shift in how startups are perceived in the broader business landscape. They have evolved from being categorised alongside small businesses to being acknowledged as a distinct entity in the Federal Budget.
“It’s fantastic to see that terms such as “impact investing” and “utilising business to tackle societal challenges” have rightfully gained prominence in the budget, reflecting their growing significance across the business world.
“While it is heartening to see these topics being recognised in the Federal Budget, it is crucial to acknowledge that the allocated resources may not be commensurate with the potential impact of our industry.
“The presence of these themes in the budget serves as a foundation upon which future conversations can be built, and we are optimistic that subsequent budgets will increasingly prioritise and support the impact investing sector.”
MD, APAC, Xero
“While Xero welcomes the Federal Budget announcements that seek to address the elevated cost of living and support Australia’s small businesses, more needs to be done to drive productivity and digitalisation.
“By introducing measures like the Small Business Energy Incentive, the Government is using its balance sheet to lower operational costs for small businesses by incentivising the adoption of energy efficiency practices – a positive but short-term solution to address inflationary pressures.
“The Government needs to prioritise rolling out measures to increase small business innovation to unlock more efficient processes, driving ongoing productivity long term.”
Australian Small Business and Family Enterprise Ombudsman
“There is support for small and family businesses to tackle immediate pressures, particularly with high energy input costs, an asset write-off boost to help re-equip and invest in productivity, tax administration changes that will help with vital cash flow challenges and much needed advice to deal with cyber security fears.
“Energising enterprise can deliver a stronger economy and these measures are a step towards delivering that.
“It is disappointing to see a reduction in support for the underpromoted Self-Employment Assistance Small Business Coaching program and the Entrepreneurship Facilitators Program.
“These programs have low awareness and can help with the success and durability of many of the 1.6 million Australians who derive their livelihoods from self-employment and make a vital contribution to the economy.”