14th May, 2019
With the Federal Election taking place this week, we’ve heard a number of announcements designed to sway small business owners across Australia, writes Benjamin Kluwgant.
As we enter the ninetieth minute of the Federal Election campaign, the Shorten opposition has gone into full swing in its attempts to show dedication to the small to medium enterprise sector.
With polls showing the ALP slightly ahead of the Coalition in their race to power, each campaign promise can have a crucial impact, making it no surprise that the recent pledges have been as noteworthy as they have been.
In theme with the rest of their campaign being a “referendum on wages”, the ALP pledged to offer SMEs a 30 per cent tax break on the wages of eligible job seekers for their first year of employment.
Under a Shorten-led government, businesses who have an aggregated turnover of less than $10 million per annum will be entitled to claim this tax break when hiring employees under the age of 25 and over the age of 55, as well as parents or carers who are trying to find their way back into the workforce.
We all know how difficult it can be for these demographics to get a foot in the door, so the idea behind this tax break is to incentives SMEs to consider hiring these job seekers.
The benefit would, however, be capped at $50,000 in wages and would be limited to 5 employees per company.
With small businesses always looking for ways to reduce their tax liability in the formative and crucial growth stages of their businesses, this revelation was warmly accepted by small business owners around the country.
Senator Kim Carr, the shadow minister for innovation, science, industry and research, announced that the ALP intends on introducing a new benefit for businesses who collaborate with research organisations like universities and the CSIRO.
The benefit is set to be administered through the existing R&D Tax Incentive (RDTI) scheme, where Labor is promising to re-write the tax legislation to include a 10 per cent premium to the existing tax offset.
The proposed premium would cover the costs associated with embedding researchers within a university as well as the employment of PhD students or graduates who are tasked with conducting various research activities on behalf of the tax incentive claimant.
According to Carr, the premium will cost the budget $170 million over a four-year period, and in the event of a Labor Party victory, the premium could be introduced as early as July 2019.
Carr’s announcement came shortly after his promise to run a review into the broader elements of the incentive, to make sure startups weren’t being unfairly discriminated against.
But after being asked where this $170 million was coming from, Senator Carr said there would be a re-allocation of funds that would see the budget for initiatives like the Entrepreneurs Programme and the Innovation Growth Centres being slashed by $309 million in order accommodate the ALP’s new innovation agenda.
I guess something had to give, right?
In a strongly worded response to Senator Carr’s recent announcements relating to the ALP’s plans for the RDTI and the broader innovation agenda, The Hon. Katherine Andrews said that the Opposition’s words were misleading, hypocritical and merely a ploy to win more votes.
According to InnovationAus, minister Andrews said that if the ALP get their way, the results would be “absolutely devastating” to the SME sector.
Aside from pledging to create a $1 billion growth fund for SMEs and Andrews’ abovementioned critical response to Carr’s promises, the Coalition have yet to put any focus on plans for increasing innovation in Australia.
Regardless of which party takes control of government, it seems that some big changes to industry, innovation and science are on the cards, leaving plenty of question marks in the minds of the broader tech ecosystem.
In addition to the standard Liberal and Labor pre-election arm wrestle, the Greens have also come out to bat for small businesses as part of their electoral campaign.
The Greens have taken the stance that small businesses need more protection over the various policies that are coming from Labor and the Coalition that will require for them to either raise wages or hire new employees.
With this position in mind, Greens’ Senator Nick McKim announced last week that small businesses (meaning, those that turn over less than $2 million per annum) should be able to claim 110 per cent of costs associated with increasing wages against their tax obligations.
The Greens also announced that they intend on negotiating this policy with the victors of this week’s election, regardless of which party wins.
To conclude, whoever you’re voting for, it’s going to be a big week for Australian politics with plenty of time for more twists and turns to take place on the road to power.