The PM Scott Morrison has announced an $800 million funding injection to assist businesses to take advantage of digital technology. At first glance, this seems like a massive digital push for small business, however, a closer look shows much of the promised funding has already been accounted for.
Supercharged online database to minimise red tape
Of the funds, $420 million will be used for the formation of a new super directory administered by the Australian Tax Office (ATO). The directory allows the government to fulfil a 2018-19 budget promise to amalgamate the Australian Business Register with the more than 30 registries currently administered by the Australian Securities and Investments Commission (ASIC).
A further $257 million has been earmarked for the expansion of the Digital Identity program in an effort to provide a more secure way for businesses and individuals to interact with government bodies online. The plan is to incorporate the previously legislated Director Identification Number into the service, which will provide a lifetime number for a director. It is hoped the new database will help put an end to phoenixing, which currently costs the economy billions each year.
Putting the kybosh on phoenix operators
“A new, modernised central business registry will simplify the process considerably for small businesses. From a small business perspective, it means they will have just one point to register for their ABN, ACN or licence. This significantly cuts red tape for small businesses,” said Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.
“Ideally this national digital register will also deliver a database of Australian small businesses. This platform will also facilitate Director Identification Numbers (DIN) which will help combat illegal phoenixing, a process where directors inappropriately take assets out of a business before liquidating, leaving staff and suppliers in the lurch, Carnell said.”
Morrison has also pledged further funding see $22.1 million in grants allocated to support the private sector to invest in 5G trials, alongside a further $7.1 million to be invested in accelerating the rollout of 5G.
Digital push to lead recovery
“This year’s budget will support businesses to recover, build back and create more jobs as part of our economic recovery plan,” the PM said.
“Many businesses moved online quickly when the pandemic hit, undergoing a decade of change in months, finding new customers or new ways of doing things. The plan supports Australia’s economic recovery by removing outdated regulatory barriers, boosting the capability of small businesses and backs the uptake of technology across the economy.”
The proposed plan also includes the rollout of open banking reforms, to help build out financial technology sectors.
MYOB CEO Greg Ellis welcomed the PM’s announcement, saying supporting the digitisation of business was essential to economic recovery.
“We are encouraged by the Prime Minister’s pre-Budget announcement today of $800 million to support the digitisation of businesses. The bulk of this spend will go towards necessary, foundational regulatory initiatives that make it easier to start a business and we applaud the steps that are being taken to cut the red tape from this process and lead our economic recovery through SME growth,” Ellis said.
Prioritising e-invoicing a necessity
Ellis described the mandating of e-Invoicing for Commonwealth agencies as an important first step but suggested more needs to be done to safeguard the livelihood of Australias two million-plus small businesses.
“Our data tells us 44 per cent of SMEs cite cash flow as the cause of extreme or significant pressure, which the universal adoption of eInvoicing can assist. We have called on Government to consider mandating eInvoicing by industry to make this a simple process for SMEs.
“Our internal modelling demonstrates that for every dollar spent on enhancing the digital capability of Australia’s small businesses, $1.20 of SME contribution is handed to the economy. Most importantly, more jobs are created. That is why it is critical we invest in a legislative framework for SME success,” Ellis concluded.
Similarly Xero’s small business advocate, Angus Capel welcomed the announcement saying prioritising investment in the nation’s digital capabilities is as essential as investing in infrastructure.
“Xero Small Business Insights reveals the heightened resilience of digitally enabled businesses. Small businesses, with heavy use of apps, have experienced revenue falls one-third smaller and job losses 40 per cent smaller than other businesses during the COVID-19 pandemic.
“A separate Xero survey found nearly one-third of businesses were planning to adopt more digital tools to help run their business if the Federal Budget outcome was favourable,” Capel added.
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