Budget 2015: Opinion - Nothing ventured, nothing gained
- 13 May, 2015 08:39
This is the budget of nothing much. A pre-election year vote grabber. Nothing more, nothing less. It has no soul, no thought for the future, no real guidance and little to distinguish it, other than the fact that it's nearly the direct opposite of the first Joe Hockey budget.
The lucky ones are all those small businesses out there. They will benefit massively from the government's estimated $5.5 billion injection. And with Treasurer Joe Hockey’s tax write-off for assets costing less than $20,000 and a 1.5 per cent cut to company tax (now down to 28.5 per cent), they can go on a spending spree. As long as their business turned over less than $2 million they can claim.
And really all you need to qualify for this largesse is an ABN! There should be plenty of applications for an ABN over the next two years.
Retail will be happy because the tills are going to be playing loud and long. For a while.
And, of course, the $254.7 million earmarked to commence the government’s digital transformation is very welcome. Finally, an investment in IT.
The question has to be asked,however, is this sudden commitment to backing small business a real economic boost with long-term ramifications or a temporary handout to ensure that the ailing Abbott government rises from the brutal flogging it got over its first Budget and hangs on to power next year? My gut tells me it is the latter. This is politics, people.
If it the government gets the nod in 2016 then it can return to its expected platform of more stringent measures, aided by the 'we were reelected' catch cry.
I had to laugh when I read that one of the winners were start-ups. Employees will get access to tax breaks on shares they receive as part of their pay. That will have them dancing in the streets in start-up land.
In fact, Sam Chandler, founder and CEO of successful Australian start-up, Nitro, went so far as to anticipate this lack of government understanding of what is a vital industry sector by issuing the following comments before the Budget was even released (everybody knew the small business handouts were coming).
Chandler said, “The Australian government seems to misunderstand the distinction between small business and start-ups. Start-ups are high-growth entities with huge potential to scale internationally. Whereas, small businesses are more localised and have few employees. Both entities have different needs and to have one uniform policy is to do injustice to both.
“While these proposed changes are great for small business, the package will have little impact on start-ups and little impact on job creation, economic growth and Australia’s position on the global stage.
“While small business is important to the status quo, start-ups are important to our future.
“It has been proven in other markets that start-ups provide the largest contribution to job creation. A famous 2010 study [by John Haltiwanger, Ron Jarmin, and Javier Mirand ‘In Who Creates Jobs? Small vs. Large vs. Young (NBER Working Paper No. 16300)] in the United States found that while start-ups accounted for only 3 per cent of employment, they were responsible for almost 20 per cent of gross job creation.
“In order to increase jobs, it’s necessary to support start-ups with tailored and helpful policies instead of generic ones that benefit a broader small business community.”
Sam’s third paragraph is key: small business is important to the status quo, start-ups are important to our future.
And that’s something this Liberal government doesn’t really get. Not that the Opposition, it should be said, is any better.
We are living in fast changing, massively disruptive time. In the ICT industry we talk a lot about transformation and disruption. Those notions aren’t just restricted to ICT. Australia as a whole, economically and culturally, is going through similar changes. But instead of leading with bravura, intelligence and informed policy-making, the country struggles under a government with its eye on its own place in history, individually and collectively, and with little or no regard for the future - either economically, environmentally or even as a global citizen.
Joe Hockey’s second budget is bit of a flashback to the past. John Howard would be smirking, and the Liberal elders will be nodding in their comfy chairs. All is well, they will murmur. All is well.
But, you know, it isn’t.
Mike Gee is editorial director of ARN and a veteran of countless Budgets going back as far as the late 1970s. His comments do not reflect those of either IDG Communications or any of its employees.