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A budget of hits and misses for small businesses and startups

- May 10, 2023 4 MIN READ

 

While the 2023 Budget has provided some good news for small businesses and startups, with its Industry Growth program and investment in AI tech, the announcements have been met with a lack of enthusiasm from members of the startup sector.

Chris Dahl, CEO of fintech Pin Payments has described the budget as a series of hits and misses.

“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.”

While Dahl welcomed the investment in tech he was critical of the temporary increase to the instant asset write-off, which upped the ante to $20,000 for small businesses to invest in operations, describing it as a “menial effort”.


“Small businesses need much more support after years of economic hardship, in order to support more Australians in jobs and boost the economy,” Dahl said.

Small business concerns ignored

Thomas Fu, founder of Motor Culture was less critical in his response, suggesting the budget addressed “the concerns of many everyday Australians with regards to inflation and rising costs”. However, Fu said the budget still failed to deliver on really supporting small businesses.

“The government’s Industry Growth Program supports new ideas and Aussie startups but does not consider the concerns of existing small businesses who have tirelessly battled through years of economic hardships due to the pandemic, inflation and global tech lay-offs,” he said.

Fu suggested the budget ignored many of the small business community’s concerns.


“While cash has been splashed in some areas by Chalmers, for the most part, SMEs have been left to fend for themselves in a time of immense economic uncertainty.

“The renewable energy superpower scheme seems to be the only area of support for small businesses which, while encouraging from an environmental perspective, requires significant capital investment from startups during trying economic times,” Fu said.

The founder welcomed the extension of the instant asset write-off, but said it was disappointing that the digital economy did not receive more attention or investment.

“Investment in technology and the digital economy is absolutely vital for small and medium businesses and for the prosperity of the Australian economy,” he said.

According to Nicholas Woodward, Country Manager at Pack & Send, one area where the government has allocated funds effectively is in providing relief for businesses struggling with energy bills.

“The sharp rise in energy prices has put a strain on businesses across the country. The introduction of energy bill relief measures will undoubtedly provide much-needed respite for SMEs, who will benefit from incentives to invest in energy-efficient technology. These initiatives not only alleviate financial burdens but also promote sustainability, aligning with the broader goals of building a greener and more environmentally conscious economy,” Woodward said.

Cyber security support for small business

One area of the budget that all agree is a great investment was the government’s pledge to increase support for small business cyber security.

“After a perilous year of cyber scams, it’s great to see increased investment in cyber security with the government investing $23.4 million over three years to support small businesses to build in-house capability to protect against cyber threats. Cyber threats are increasingly becoming an irreversible threat for SMEs and more must be done to ensure hard-working Australians are not scammed in business,” said Caitlin Zotti, co-CEO of Pin Payments.

Adds Woodward: “The allocation of funds for SME cyber protections recognises the pressing need to address the growing cyber threats faced by small businesses. For many small business owners, cyber risk ranks low on their list of priorities due to the numerous challenges they face daily. However, the government’s investment in this area is a welcome step, as it acknowledges the critical role that cyber security plays in safeguarding sensitive data and digital infrastructure. Adequate funding for cyber security programs will empower businesses to implement robust security measures and protect their operations from the increasing number of cyber-attacks targeting small businesses. Additionally, these initiatives enhance the resilience of SMEs, bolster their reputation, and foster customer trust, creating a more secure and stable business environment.”

What about women in business?

Zotti also welcomed the announcement of initiatives that will attempt to deliver gender equity and equality by publishing the gender pay gap – but suggested more practical initiatives that elevated women at work would have been a better use of funds.

“We had hoped to see other initiatives which encouraged employers to train, retain and hire women in business, especially in skills shortage areas in this budget,” Zotti said.

A more comprehensive approach needed
Woodward says while the government has shown effectiveness in certain areas, there are areas where greater attention and funding allocation could have been beneficial for businesses.

“Mental health support services, for instance, have not received the expected allocation in the budget. Many small and medium businesses are still grappling with the aftermath of the pandemic, facing economic pressures, and dealing with the trauma of the past year. Increased spending in mental health support is crucial to address the well-being of business owners and their employees, ensuring they have access to the necessary support and resources to navigate these challenging times.

“Additionally, rising costs of living, including rent, interest rates, and the overall impact on spending, pose significant challenges for small businesses. Running a business is not immune to the rising cost pressures that individuals and families experience. Every dollar spent on running a business affects the income earned by business owners, who are often parents and members of the community. Balancing responsible policies that control spending and address cost pressures without pushing families and businesses over the edge is essential. A more comprehensive approach that considers the long-term impact on health, community well-being, and the ability of small businesses to remain competitive is necessary,” Woodward concluded.


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What’s in the 2023 Budget for you? Major measures, cuts and spends at a glance

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