Federal Budget Analysis: Retailers the big winners
TASMANIAN retailers are Budget winners.
While the Government remains resolutely optimistic about the transition from the mining boom to a diversity-led economy, the takeaway from last night’s Budget for Tasmanian retailers should be one of cautious optimism.
Despite the Treasurer’s assertion that he does not support a Budget “winner and loser” mentality, there is no doubt that under this Budget small and medium sized businesses are clearly the winners and this is good news for the retailing industry in Tasmania.
On the same day the Reserve Bank signalled concerns about deflation in the economy, and cut interest rates, Treasurer Morrison and the Turnbull Government flagged a company tax rate reduction from 28.5 per cent to 27.5 per cent for small businesses with a turnover up to $10 million.
In addition the Budget extends the $20,000 instant asset write-off originally introduced by Joe Hockey in 2015, which will assist small retailers who turn over less than $10 million.
Clearly the Government, and to some extent the Opposition, recognise that small business will require significant assistance if the sector is to lead the economic recovery effort resulting from the end of the mining boom.
Prime Minister Turnbull’s buzzwords around this Budget have been “agility” and “disruption” and the Government is clearly at pains to provide the electorate with an economic plan to make transition to the “new economy” as smooth as possible.
As we head into a long winter election campaign, what does this mean for the retail industry in Tasmania?
The tax cuts and incentives outlined in the Budget are designed to support existing small businesses as well as providing tangible advantages for startups.
Indeed, the tax cuts in the Budget for small business echo the trend that sees young people and university graduates considering start-ups and contract work as new career choices; entrepreneurship, incubators, start-ups and small business are the new career aspirations for many in Tasmania.
The number of small retail businesses continues to grow, aided by technology and a renewed sense of optimism in the state.
Described by the Treasurer as “practical, targeted and responsible”, this is a make or break Budget with the election just two months away.
The Government’s “jobs and growth” mantra and the acknowledgment that we can no longer rely on Australia’s natural resources to fuel the economy have led to the focus on small and medium-sized businesses as the new drivers of the economy.
Shadow Treasurer Chris Bowen has signalled that while Labor supports the Government’s tax cuts for small business, it does not agree with the proposed tax breaks and incentives for the Government’s new classification of a small to medium enterprise.
For small retailers casting their votes in the election, this could be a defining point of difference.
After three years of Coalition government, business investment remains a contentious issue and the Government hopes to reduce the tax burden on small business to allow them to make much needed investment in business and the new economy. For small retailers this might provide a much-needed incentive to grow business in the state.
Dr Louise Grimmer is a retail researcher at the University of Tasmania, and Director of retail consulting firm Shopology.
This article originally appeared in the Mercury on Wednesday 4 May 2016.