Treasurer Josh Frydenberg has handed down the latest Budget overnight, providing massive tax breaks to small businesses, in a bid to encourage them to digitalise their operations and spend more on staff training, but is it enough?

A range of business leaders have responded to the announcements, weighing in on the measures that are a welcome boost and the areas that needed more attention.

Global small business platform, Xero has welcomed the Federal Government’s 2022 Budget focus on increasing the skills and digital capability of Australian small businesses.

“We welcome the range of measures announced to support small businesses to digitise and upskill. We are also pleased to see digital service providers recognised in this budget, alongside tax practitioners, as helping small businesses go digital,” Xero managing director for Australia and Asia, Joseph Lyons said.

“Delivering a $120 tax deduction on every $100 spent on technology, such as cloud computing, cyber security and web design, will provide small businesses with access to better tools and services. This should help spur business and job growth.”

Recent Xero research found one third of small businesses surveyed (33%) believe a cash rebate or grant to spend on technology would help them use digital tools in their business, indicating these measures could bring a welcome tech boost.

“We also welcome the addition of $5.6 million committed to the Fair Work Commission to establish a new dedicated small business unit supporting the sector. Combined with the previous announcement to invest in the Modern Awards Pay Database and other measures on the Attorney General Regtech Roadmap, we foresee a simpler, fairer and more digitised industrial relations system for small businesses.”

Leading business management software provider, The Access Group Asia Pacific president, Kerry Agiasotis welcomed compliance reprieve and technology support.

“My team and I speak directly with many business owners across Australia on a daily basis, and one of the most common themes we hear is about the burden of compliance,” Agiasotis said.  

“Compliance and red tape relief for SMEs is somewhere in the realm of $800 million in annual savings on compliance, also delivering cash flow support around 2.3 million tax paying businesses. The specifics of how these savings will be achieved include a range of reduced administrative burdens, a reduction in GDP uplift rates and a change to how companies calculate PAYG instalments as a factor of financial performance.

“Details aside, a slowing of regulatory updates and compliance requirements will be a welcome reprieve for many SMEs still on the long road to recovery. Any form of respite that scaffolds the recovery of these key contributors to our economy can only be a good thing,” he added.

But does it go far enough? Without the security of a truly compliant software solution, keeping up with regulatory changes becomes burdensome for small businesses, as it takes time, effort and expertise away from other activities that may drive a business forward, according to Agiasotis.

“As an example, those in the HR and payroll space are currently staring down the barrel of the continued transition to Single Touch Payroll, with Phase 2 (STP2) upon them. This change will have significant knock-on effects throughout SMEs where resources are already often limited,” he said.

“To comply, SMEs must digitise their payroll with appropriate compliant software. While STP2 will ultimately deliver streamlined reporting and other business benefits – this can only be recognised after a business has undergone the digital transformation required to make it a reality.  

“Extending time frames for compliance is a great first step, and allowing flexibility around payments as a factor of financial performance is also a welcome initiative for SMEs. But the real game changer is in supporting these businesses with the ‘Technology Investment Boost’ they need to realise the benefits of the digital revolution.

“Last night’s budget saw the announcement of support for small businesses looking to build their digital expertise and capability via a range of additional tax deductions – including a further 20% on expenses and assets (up to a total of $100,000) and a 20% deduction on external training to upskill employees in areas such as cloud computing, cyber security, and web design.

“But the only way we will see true and long-lasting recovery and step change for the future of Australian SMEs is if the broader business community rally behind these initiatives to take on some of the heavy lifting on behalf of small business, to help them realise successful digital transformation.”

Omnichannel experience platform, Brauz is pleased to see some of the measures put in place by the government, such as petrol tax cuts to minimise the impact of these rising costs. But it needs to go further to include increased housing and childcare support, in order to prevent the damage seeping into all areas of the economy, according to CEO, Lee Hardham.

“Retailers have had it tough during the pandemic. Almost 18 months of sporadic lockdowns were topped off with supply chain issues, staff shortages and the Omicron outbreak,” he said.

“Whilst consumer sentiment started looking up in February according to the ABS, the Consumer Sentiment Index declined 4.2% month-on-month in March as a result of concerns over the war in Ukraine, the floods in south-east Queensland and Northern NSW and expectations of higher inflation and interest rates. This is the weakest score since September 2020.

“There is a definite fear amongst the retail industry that consumer spending will take a nosedive as the uncertainty around the rapidly rising cost of living leads consumers to hold on tighter to their disposable incomes. Retailers themselves have faced rising costs of business, from costs of fabric to freight fees. Some, particularly smaller retailers, have been forced to pass these costs onto customers, further inflating the issue of living affordability,” he added.

Point of sale systems provider, Lightspeed recognised the challenges faced by the retail and hospitality industry over the last two years, so any support is welcome, but staff shortages is a major issue that was not considered in the Budget.

“There is record unemployment but there are also record jobs available and these need to be filled to keep our economy alive and support business,” head of marketing, Simon Le Grand said.

“Both industries are customer-facing and require more people to be in those roles to keep businesses functioning. Instead, they are operating on skeleton staff between rising Covid cases and a smaller pool of talent.

“We believe both industries need direct investment in talent from the government to assist with these staff shortages and support for SMBs that have had to temporarily shut their doors due to their staff being sick. Measures like these would help reboot both industries, so it is disappointing to see little done to support either.”