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Federal Budget 2017: What Is Likely To Have The Biggest Impact On SME Sector?

Federal Budget 2017: What Is Likely To Have The Biggest Impact On SME Sector?

Federal Budget 2017 has been well dissected since it was announced on Tuesday night, but the item most likely to have long-term impact on the SME sector has been mostly overlooked in the post-budget analysis.

While the instant capital expense deduction gained most media attention, it is the boost to infrastructure spending that is likely to bring the greatest long-term benefit to Australia’s hard-working small to medium business community.

The $75 billion 10 year commitment to infrastructure spending includes $8.4 billion for the Brisbane to Melbourne inland rail line, $10 billion to fund priority regional and urban rail developments and $5.3 billion to build Badgerys Creek airport in Western Sydney.

These flagged infrastructure projects will help small to medium businesses throughout the country, in both urban and regional areas, with accessibility to staff and markets. This is likely to boost the SME sector by creating jobs now as well as down the track.

The continuation of the highly popular immediate tax deduction on capital expenses worth up to $20,000 is the Budget’s water cooler topic for SMEs.

Its impact may be over-stated, however it is still a welcome move that will encourage investment in plant and equipment for the more than three million small businesses with annual sales under $10 million.

While there was some attempt to address the pressing issue of reducing red tape for the sector (with the government announcing $300 million in funding to states that cut red tape to small business), the detail of how this will work or how effective it will be is still not clear.

Red tape is a crucial issue that affects the small to medium business sector on a daily basis.

Simplifying the complex tax system, getting rid of payroll tax and cutting red tape would have the biggest daily impact for Australia’s small to medium business sector.

While the instant tax deduction of up to $20,000 for capital expenses is a popular measure, it does not have the long term positive impact that would come with an extensive SME tax and red tape overhaul.

Our Scottish Pacific SME Growth Index surveys the small business sector across Australia twice a year, and high and multiple taxes, along with red tape, are always listed by business owners as a barrier to growth.

Peter Langham is CEO of Scottish Pacific Business Finance, part of the Scottish Pacific Group (ASX:SCO). An ASX 300 company, Scottish Pacific is the largest specialist provider of working capital solutions for SMEs in Australia and New Zealand.

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