Deficit of love for Budget

May 13, 2010: The contrast in opinions of the Federal Budget from retailer-representing trade associations makes interesting reading, with the small business group COSBOA giving it a fairly enthusiastic thumbs up, while the Australian Retailers Association claims it has ignored small business.

‘The up-side of the predictable budget is that there is certainty for small businesses that can ill afford more instability or change as they are recovering from the GFC, said Jaye Radisich (pictured right), CEO of the Council of Small Business of Australia (COSBOA).

‘If the Australian economy is stable, the cost and availability of finance will be within reach for small businesses that need capital to grow or smooth cash flow – which our research indicates is the number one issue of concern for small businesses.

Radisich, whose previous gig was as an ALP state member of parliament in Western Australia, then went on to enumerate the various benefits delivered to small businesses (in a document that could almost have been created in the press office of the Treasurer!):
– Tax reforms for small business in the Henry Tax review – a reduction in company tax for small businesses and depreciation write-off for capital items up to $5000. Not to be introduced until 2012.
– ‘Enhanced mediation and dispute resolution’ for franchisees and franchisors via the new Franchising Code.
– A raft of small business programs with dynamic names: Small Business Support Line; Small Business Online; Enterprise Connect; funding for Small Business Advocacy Services through 36 local Business Enterprise Centres (BECs); Paid Parental Leave program; Small Business Superannuation Clearing House; National Business Names and the Standard Business Reporting (SBR) program.

(And there’s you thinking the government didn’t give a damn about you and your small business!)

But it wasn’t all homage. Taking the gloves off, Rasdisich called for less red tape and more streamlined tax arrangements, and restated COSBOA’s opposition to the increase in tobacco excise, as it reduces the ‘non-tobacco consumer spend in small retail outlets’.

– Take that, Canberra!

The Australian Retailers Association (ARA) on the other hand, said the 2010 Federal Budget has disregarded ‘the engine room of the economy’ (that tired old cliché), with only ‘old news’ initiatives announced for small business.

(NOTE: The ARA is the peak body representing all retailing in Australia. The big two retailers, Coles and Woolworths, have established a rival organisation, The Australian National Retailers Association, specifically to represent the interests of larger retail players.)

ARA executive director Russell Zimmerman said retailers who have been overburdened with regulatory changes would be disappointed they have not been recognised in the budget – they need a boost now, not in two years time.

‘The only headline small business initiatives in tonight’s budget are nothing but recycled news from the Henry Tax Review announcement last week,’ he said.

‘The decision to expedite a cut in company tax rate from 30 to 28 percent for small business was announced last week and will mean little for retailers who will also be hit with increased superannuation payments for employees. The tax write-off for assets under $5000 was also part of the Henry Review and like reductions in company tax, will not come into effect until 1 July, 2012.

He called for the abolition of payroll tax and attacked the new Fair Work regulations.

‘Retailers are battling with an overwhelming amount of regulatory change including…the new General Retail (Modern) Award in July 1, 2010 and the threat of inspections to follow from the Fair Work Ombudsman.

‘Yet the Federal Budget’s focus on skills completely overlooks employer training to understand the Fair Work Act.’

Industry views

Meanwhile, back at the photo retailing ranch, comments from industry leaders are even more critical.

‘A very un-progressive budget!’ said John Swainston, managing director of Maxwell International Australia.

‘The lower tax rate for smaller business (and earlier than big business) is a small sop to middle Australia. Most of the benefits are two or three years off, anyway.

‘The savings “incentive” is a joke. Read what Henry actually suggested!

‘Good to see the Super contribution start to rise again, a major reform started by Keating, and dropped, unwisely, by Costello.

‘But it will be tough for many employers, especially those in retail. The big issues of real reform advocated by the Henry review have been left in the too-hard basket.

‘A key issue of overseas tax-free purchases avoiding GST has been ignored, (This week we learn that nearly one dollar in two spent online is now going to an overseas supplier!)

‘The one productive part of industry – mining – has been raided as if it was a free cookie jar for the taking.

‘As one Sydney Morning Herald reader put it so well in last week’s letters page: “I didn’t expect this lot to keep all their promises. But it would have been nice if they had kept at least one”.

‘In summary: Total wasted opportunity to accelerate reform, something which has died under Swan/Rudd, unlike the excellent work and truly tough decisions made by Keating/Hawke and Costello/Howard.

‘Underwhelming,’ said Richard Robertson. ‘It doesn’t do anything to create security for people buying houses, and it’s not going to stimulate retail.’

He said that according to an ANZ budget night briefing for business executives, interest rates would reach 9 percent by the end of the year.

‘There’s nothing we are jumping up and down with joy about. None of it will encourage more spending.

‘Most retailers just haven’t got the customers coming in.’

He identified the differential in price between overseas and Australia as the key concern for photo retailing in Australia, and the ‘inability to compete on even ground with overseas and local internet-only dealers’.

What do you think – has the Federal Government done anything for small business in this budget – and more broadly in its business, industrial relations and competition policies? (Feel free to use the Comment box below this article.)


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