Budget 2015: Channel players welcome "stimulus" budget

The Abbott government’s latest budget had a number of offerings for small business and technology. But are tax cuts, deductions and injections any good for the channel?

We spoke to a number of players to get their thoughts.

Distribution Central executive chairman, Scott Frew, said there was nothing earth shattering, but the 1.5 per cent tax cut for small business was a positive.

“That’ll help the mum and dad micro-businesses that are around, any tax cut is fantastic for any Australian operation.”

Frew said that the $131 million in funding around data retention for telcos was a positive, but not without it’s drawbacks.

“The spend on IT for some of those major projects is always good for the industry, although that is overshadowed with the concern for privacy and independence as well.”

Dicker Data founder and chief executive, David Dicker, said that while some of the offerings for small business and tech companies were positive it was too early to tell if it would have a substantive impact on the channel.

“Obviously, the government thinks that it is going to provide a substantial stimulus. We would certainly like to see an uplift in hardware sales and the like, but you just can’t predict it.

“You can never know what people are going to do. You would like to, and that’s what marketing is all about but we all know how effective that can be, or not.

“I’m pretty hopeful to be honest, the market has been quiet for so long that you really think it ought to pick up at some stage but you can’t really predict it.”

Distribution Central managing director, Nick Verykios, said the key thing with budgets in general was the effect it would have on business and its ability to adapt to the constantly evolving market.

“Will it dramatically change the way we can structure our businesses and stay in Australia, rather than entrepreneurs moving elsewhere? That’s the big question.

“If it’s going to put a tap on that, it is a good thing, otherwise all our talent will continue to leave.”

Hemisphere Technologies director, Peter Phokos, told ARN he believes there will be something in this budget for resellers but not much for the distributors.

“Resellers will get a cash injection from the government in some way, shape or form. In saying that, it depends on where they will channel that money. Whether their spending will prop the industry or whether they will spend it on internal resources.

“I do believe it will help but it will be better for the resellers and not so much for the distributors. I think they will largely spend the money on internal infrastructure.”

Bulletproof Group director of sales and marketing, Mark Randall, said that while there were some good individual initiatives such as the $254m investment in Digital Transformation, there seems to be a lack of joined up thinking in the budget this year.

"The Department of Finance is assigned with squeezing savings from IT, but they’re spending $17.6m on a new AFP datacentre, instead of using Cloud with proven cost savings.

"On the other hand it is great to see that employee share options will no longer be taxable upfront, bringing Australia in line with other OECD nations.

"Start-ups often rely on share options to attract staff. Establishing a crowdsourced equity funding framework will also be a great help to them.

"Together these initiatives will be a significant boost for the next generation of market disruptors and digital leadership.

"While there could arguably be some negativity around the cuts to the Entrepreneurs Infrastructure Program, the effect of the other measures in stimulating private sector activity will significantly offset this reduction.

"When the other tax changes for SMEs are considered this budget is definitely a positive one for supporting start-ups, entrepreneurs, and the small business sector."

Nitro founder and chief executive, Sam Chandler, was not so positive.

Chandler had predicted a lack of government understanding of the start-up sector by issuing comments before the release of last night's budget.

“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."

Hosted Network managing director, Ben Town, echoed the comments of many channel players saying that the budget should be good for resellers, but that he was sceptical the service providers would see much of a benefit.

“Small businesses are going to be the winner, that’s going to allow those moving to a server-based infrastructure to more easily bear that burden.

“I think the spending will be mainly on internal infrastructure for those companies. As a service provider, we are not going to see a huge benefit.

“There will be more of a benefit for traditional hardware deployments, whether that be on premise, laptops or mobile devices. You’re talking under two million so these companies are not going to have a huge need for large infrastructure.”

“SMB is the largest section of the Australian economy so hopefully that will spur some growth.”

Local Measure founder and chief executive, Jonathan Barouch, said the most encouraging thing about the budget was the mere mention of start-ups.

“The big surprise was that Joe Hockey used the word start-up about four or five times in his speech. That was interesting because I think most Australians would not have heard the word and certainly not mentioned by a treasurer.

“It was a pretty big shift from last year’s budget where they cut several hundred million, closing things like Commercialisation Australia and canning grants like the IIF and cutting money out of the CSIRO.

“This year it seemed to be front and center in the $5.5 billion package.

“The benefits for start-ups were pretty well flagged. The easing of the rules around crowdfunding and the employee share scheme were no big surprise.

“We need to make a distinction between start-ups and small business. The language use throughout the budget did not make that distinction and I think it’s a pretty important one.

“A butcher or a hairdresser is a small business, they are the lifeblood of the Australian economy. A technology start-up is a high-growth, highly scalable business that grows from two people to 1000 people and has a multi-billion dollar market cap. Businesses like that drive revenue and employment into Australia.

“The government needs to help both, but if we are talking about the latter, we need more targeted assistance. I don’t think we have done ourselves any favours in that respect.”

SAP A/NZ president and managing director, Andrew Barkla, welcomed the budget that he said showed signs of recognising the significance of the digital transformation journey ahead.

“We are living in a highly competitive, hyper-connected and disruptive global economy. As a nation, we can’t afford to ignore investment in digital transformation.

“It is encouraging to see a commitment to the implementation of the digital transformation agenda and to the Digital Transformation Office. The modernisation of government services to improve digital experiences for the citizens of Australia is essential if we are to compete in a growing digital and global economy.

“Investment in digital infrastructure – such as that announced for Centrelink – drives further private sector investment and creates business opportunities. It also paves the way for start-ups and creates jobs.

“The package of small business tax incentives is not only a positive outcome for Australia’s small business community, but also for the technology partner ecosystem who will see more purchasing power and demand for technology solutions as small businesses grow.”

Barkla also warned there is still much to do in readying Australia’s youth for the jobs of tomorrow.

“If we really give the country's long-term interests priority, then we need to continue to take a long, hard look at education.

“We are seeing the highest level of youth unemployment in decades and a widening ICT skills gap. Given that an estimated 75 per cent of the fastest growing occupations will require Science, Technology, Engineering and Mathematics (STEM) related skills and knowledge, it is imperative we introduce these skills into our curricula early.

“The investments announced to improve teacher education indicate a small step in the right direction. However, specifics as to how the Government intends to support and invest in curricula, partnerships and programs that integrate education and work experience, providing the skills tomorrow’s talent need to compete, are lacking.

“ICT is not relegated to technology companies or IT departments. ICT skills are needed throughout entire organisations, across all industry sectors,” Barkla concluded.