Today’s budget will deliver the promised tax cut for small business as well as doing more to push people into jobs.
The Government is pinning its hopes on winning over the nation’s 2 million small businesses.
After being stung by the anger at last year’s budget, the Government is trying to ensure this one wins more friends.
The backlash from last year’s budget was so strong it contributed to an attempted leadership spill.
Prime Minister Tony Abbott has been so wary of repeating last year’s mistakes he went out of his way a few months ago to explain it would be a much less exciting budget this year.
“I think people will find the budget almost dull compared to last year,” he told Melbourne’s 3AW in March.
But Small Business Minister Bruce Billson has the big surprise element of this year’s budget in his portfolio and he says it is far from dull.
“A delightful package, a delicious package energising enterprise and showing respect and reward and encouragement for those small businesses that are crucial to jobs and economic growth in our country,” Mr Billson said last week.
The Government says small business is the engine room of the economy and this package is aimed at creating a surge of confidence including with a tax break.
Tax break a step in the right direction
Peter Strong from the Council of Small Business of Australia (COSBOA) said the tax break was only part of what his members wanted.
“Everybody likes a tax break. Nobody says ‘no, thank you’, but it’s not the big thing,” he said.
“None of my people get excited about the tax break. What we want is that focus on spending.”
Mr Strong said an investment allowance would send a message to small business to go out and spend money on equipment they need to grow their business.
“Which means jobs will come with it more than likely and that will get cash flowing through the economy and that’s what we want to see. I’m sure that what the Treasurer wants to see and what the Government wants to see,” he said.
“There’s 2.1 million of us, we employ over 4 million other people, we’re across all different sectors of the economy.
“We do importing, exporting, we do the whole range of things, so they’re doing the right thing concentrating on us.
“Let’s hope they know how to communicate with us and give us what we want to help us wake up with confidence on Wednesday morning.”
But the tax cut of at least 1.5 per cent is set to deliver a two-tiered tax system, with big businesses still paying 30 cents on the dollar.
Government facing pushback from senate
All the changes will have to be wrangled through the Senate and this year the splintering of the Palmer United Party makes it more challenging than it was last year.
Senators are already resisting the plan to link new childcare measures to last year’s budget announcement that Family Tax Benefit Part B should be cut when the youngest child turns six.
“If they want to help out small business what they will do is they will leave that Family Tax [Benefit] Part B in there because that Part B usually gets spent on small businesses in their local community, so that would be a good start,” senator Jacqui Lambie said.
Labor’s spokesman for finance, Tony Burke, questions how the Government plans to actually link the two measures.
“Its rhetorically tied. It’s a measure in last year’s budget [and] unless they’ve varied it, it won’t even appear in the budget papers,” Mr Burke told Lateline.
“So it’s tied to the extent that they’ve come up with a new focus group, a new level of spin, a new argument for the day, saying these things are now locked in together.”
Today’s budget — with its heavy focus on small business, families and jobs — is delivered by a treasurer under pressure.
It is laden with measures to entice people to find a job, boost their hours or delay their retirement — with measures like more child care for parents as well as incentives for employers.
One of the measures announced in last year’s budget was to make unemployed people under 30 wait six months before they could receive the Newstart allowance.
The Senate blocked it, deeming the measure too harsh. It is not clear if the Government will keep those savings on its books and try again or if it will use this budget to drop that plan.