Verdict: The Pie with no sauce
Treasurer Jim Chalmers has handed down the 2023-24 budget, delivering Australia’s first budget surplus in 15 years. It’s a solid budget but not quite satisfying in terms of industry support. The emphasis of this budget is very much on addressing cost of living pressures. There are a few benefits for business, but no real highlights.
Support for Small Business
Some good news for small businesses, the instant asset write-off is back. That means businesses with a turnover below $10 million will be able to deduct the full cost of assets that cost less than $20,000! And the best part? You can write off multiple assets as long as each one is below the $20,000 threshold.
But wait, there’s more! The government is also introducing the Small Business Energy Incentive from 1 July 2023. This program is designed to help small and medium businesses save on energy bills. If your business has a turnover of less than $50 million from 1 July deduct an extra 20% of the cost of eligible depreciating assets. These assets include electrified heating and cooling systems, more efficient white goods, and even installing batteries and heat pumps.
The maximum amount that can be claimed through the ‘Energy Incentive’ is $20,000, which means up to $100,000 worth of spending can be eligible for the incentive. This measure is expected to benefit up to 3.8 million small and medium-sized businesses. So, what are you waiting for? Start planning and take advantage of these great opportunities!
Cuts to Export Grant Funding
The Export Market Development Grant (EMDG) program, which provides reimbursement for export promotion expenses for aspiring and current exporters, underwent a major refresh in 2021, resulting in record low grant amounts being awarded to applicants. We wrote extensively about this last year here. The bad news is that it doesn’t end there.
The program has been dealt another blow, with the government announcing they will save $61.0 million over 4 years from 2023–24 by reducing funding for the EMDG program. This is disappointing news for a program that has been supporting business for almost 50 years.
National Reconstruction Fund (NRF)
One of the largest initiatives to support Australian Industry received another mention with $61.4 million being invested to establish the National Reconstruction Fund Corporation, which will manage the $15 billion fund (already committed by the government) to co-invest in transformational projects across specific sectors.
While the NRF Corporation won’t provide grant support they will provide finance for projects that diversify and transform Australia’s industry and economy. This means that they will support key sectors like resources, agriculture, forestry and fisheries, medical science, renewables and low emission technologies, defence capability, transport, and enabling capabilities such as engineering, data science and software development.
Science and Innovation
The Government is rolling out the Industry Growth Program, with $392.4 million earmarked to help SMEs and startups turn their ideas into reality. Targeted support will be available to businesses operating in key sectors prioritised by the National Reconstruction Fund (see above).
Additionally, the Government is allocating $3.4 billion over 10 years from 2023-24 to establish the Advanced Strategic Capabilities Accelerator within the Department of Defence. This initiative aims to fast-track the translation of innovative new technologies into Defence capability, working closely with Australian industry.
The budget again falls short in providing support to boost investment in innovation. R&D spending in Australia has taken a hit over the past decade, dropping from a high of 2.4% in 2008 to a low of 1.8% in 2019 (well below the OECD average of 2.7%). While Labor promised to increase spending to 3% by 2030 before the last federal election, there’s been no progress on this front yet.
Critical Technologies
There’s evidence of a big boost to the development of critical technologies with a $116 million investment to support the development of critical technologies in Australia to drive economic growth, boost technology industries and support the creation of new jobs.
This includes $101.2 million to support businesses to integrate quantum and artificial intelligence (AI) technologies into their operations, through a number of measures including extending the National AI Centre, establishing an Australian Centre for Quantum Growth to support growth and commercialisation in Australia’s quantum industry, and supporting SME adoption of AI technologies.
The government will also establish the Powering Australia Industry Growth Centre to develop advanced technology and skills as part of the Government’s Australian Made Battery Plan.
Powering the Regions
In a significant budget commitment, the Government will allocate $1.3 billion over 5 years to support the decarbonisation of existing industries, develop new clean energy industries and support sovereign manufacturing capacity essential to the energy transition.
This will include $400.0 million to establish the Critical Inputs to Clean Energy Industries Stream to support the sovereign manufacturing capability of industries that produce inputs (primary steel production, cement and lime, alumina and aluminium) that are essential to the development of Australia’s clean energy industries and a further $400 million to establish the Industrial Transformation Stream to support reduction of direct and indirect emissions at existing industrial facilities in regional Australia.