With a focus on alleviating cost of living pressures, the federal government’s latest Budget also includes a number of programs targeting SMEs, with key drivers being innovation and energy efficiency.
Delivered on 9 May, the Albanese government’s latest Budget has attracted mixed reactions, with the Ai Group, Australia’s national employer association, saying it “lacks the urgency and imagination required to power the Australian economy through a period of acaemic growth”, and the food manufacturing association, AFGC, praising the government for its restraint.
“We congratulate the government on its responsible decision to bank most of the windfall gains we see in this year’s Budget,” said Australian Food and Grocery Council (AFGC) CEO, Tanya Barden. “It is important to work to stabilise the economy now as we still face great global economic uncertainty.”
Budget features relevant to the Australia’s alternative protein space include:
Small Business Energy Incentive
$310 million will be provided to SMEs to improve their energy efficiency and electrify their assets.
Businesses will annual turnover of less that $50 million will be able to deduct an additional 20 percent of the cost of eligible depreciating assets that support electrification and energy efficiency.
This will run from 1 July 2023 to 30 June 2024, with up to $100,000 of total expenditure eligible for the incentive, and a capped bonus tax deduction of $20,000 per business.
“This budget provides much-needed cost of living relief while initiatives such as the Small Business Energy Incentive can help small and medium food and grocery manufacturers invest in upgraded, energy-saving plant and equipment,” the AFGC’s Barden said.
“This is sensible support for a vital industry that keeps supermarket shelves stocked but is still facing fragile supply chains, soaring input costs and subsidised foreign competitors.”
Industry Growth Program
The federal government will establish the Industry Growth Program, worth over $392 million, to support SMEs and start-ups to commercialise their ideas and grow their businesses.
According to Ed Husic, Minister for Industry and Science, this initiative will offer businesses grants and mentorship and will expand the pipeline of investment-ready projects for the $15 billion National Reconstruction Fund (NRF) to consider in the coming years.
As with the NRF, the Industry Growth Program will focus on seven priority areas:
- Renewables and low emissions technologies
- Medical science
- Value-add in the agriculture, forestry and fisheries sectors
- Value-add in resources
- Defence capability
- Enabling capabilities
“This end-to-end approach will maximise the return on taxpayers’ investments and provide a clear pathway for our entrepreneurs to turn their ideas into thriving businesses in Australia instead of overseas,” Minister Husic said.
However, Ai Group’s chief executive, Innes Willox, said the Program is a watered-down version of an existing program.
“A new Industry Growth Program is a cut-down, half-funded, government-run version of the existing Entrepreneurs’ Program, which has provided support for smaller businesses to strategically plan for growth and expansion. Government-run programs providing direct support for businesses rarely achieve their objectives,” Willox said.
(A government website shows that the Entrepreneurs’ Program is now closed.)
Instant asset write-off
The government said it would improve cash flow and reduce compliance for small businesses by temporarily increasing the instant asset write-off threshold to $20,000, from 1 July 2023 until 30 June 2024.
Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.
The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write-off multiple assets.
The new scheme is a significant variation on the Temporary Full Expensing scheme, introduced during Covid, and allowing Australian businesses with turnover of up to $5 billion to claim an immediate tax deduction on eligible assets of any value. This scheme is due to close at the end of the current financial year.
Research and development
According to the Australian Academy of Science, the Budget is “business as usual” for science, with president Professor Chennupati Jagadish arguing Australia’s overall investment remains lamentable.
“Figures released in late April show that the Australian government’s investment in science, research and innovation is the lowest on record at 0.49 percent of GDP,” he said.
Relevant investments in science and R&D in the latest Budget include $4.5 billion in science and research through universities in 2023-24, and $3.3 billion to support R&D in industry, as well as more than $3.5 billion in science agencies like the CSIRO.
The Academy of Science welcomes this support but says more is needed.
“Reversing the downward trend of government investment in R&D is not the work of any single Budget,” Jagadish said. “It will take a decade or more of commitment and effort from government, industry and the higher education sector to boost total investment in R&D. Work must start today.”
National Reconstruction Fund Corporation
$61.4 million in funding will go towards supporting the establishment and operation of the NRF Corporation. Once operational it will administer the $15 billion NRF to invest in projects across the priority areas listed above.
Innes Willox was again critical of this announcement.
“The government’s much-touted $15 billion National Reconstruction Fund receives seed funding of only $550 million this year, almost stalling it at the starting line. This represents 3.6 percent of the promised total NRF funding,” he said.
“Overall, the Budget doesn’t seek to cure the fundamental problems that Australian businesses and the economy face. While it reduces debt, the focus on short-term household relief will not provide the productivity growth we need now and the jobs we need for the future.”