As always, there are the winners and losers in the federal budget.
Among the measures that affect businesses, tech and science projects will be getting more funding, personal and business tax cuts are coming, there are reforms to open banking, changes to the research and development tax incentive, increased investment in AI and machine learning, and funding set aside for a new Australian Space Agency.
Here’s what 16 CEOs in a variety of industries are saying about the budget.
Beau Bertoli, Prospa joint CEO
Open banking paves the way for a fairer, more accessible financial system that puts control back into the hands of customers. It’s gratifying to see the Treasury’s commitment to legislating a Consumer Data Right that will give Australians greater control over their own data.
The CDR is the first step towards increasing innovation and competition in Australia’s finance industry at a time where disruption is badly needed. As such, we hope the timeline for implementing an open banking system remains ambitious.
Giving Australians control over their personal data will ultimately make it easier for people, including small business owners, to access new products and services.
It’s great to see the Government continuing to support and invest in Australia’s fintech sector. However we had hoped to see some measures that would reduce the relative advantage enjoyed by larger banks.
Promoting the ability of non-banks to access to lower cost wholesale funding would have fundamentally leveled the playing field in the finance industry. This would mean companies like Prospa could provide small business owners with even easier, lower cost access to finance, and create a more competitive finance market – something Australia desperately needs.
Rafael Moyano, The Adecco Group CEO Australia
It is disappointing to see that the proposed business tax cuts for larger companies couldn’t come into fruition in time for the Budget. Australia has always been known for its high tax rate, which is a massive deterrence for organisations looking to set up shop here. When compared to the world’s most powerful financial centres – the US at 21 per cent, the UK at 19 per cent, Singapore at 17 per cent and Hong Kong at 16.5 per cent – a lot more can be done.
Reducing the corporate tax rate will go a long way in helping Australian businesses stay competitive against their global counterparts. Importantly, it will place companies in a better position to create more jobs and offer better paying ones. This will have a positive knock-on effect on attracting and retaining top local and international talent, in turn propelling Australia into a key financial and innovation hub for the region.
Luther Poier, BlueChilli CFO
The changes to the research and development tax incentive are not wholly bad for the startup sector. Targeting large companies may be clever, but there is a trickle down effect that may be reduced with the savings on large company R&D incentives. Too early to see if this will drive some R&D offshore – hopefully not.
The introduction of a $4m cap on each refund for companies with annual turnover less than $20m could have been worse; nonetheless, there are high cost, capital intensive R&D areas like biotech and increasingly hi-tech manufacturing, that may suffer from this cap.
The increased compliance focus is welcome by everyone as long as it is legitimate and not a program cost that would be better spent on incentives.
There still needs to be more support for commercialisation of R&D, if we are to drive further gains in startup growth and job creation from this incentive.
Anthony Millet, BrickX CEO
While this year’s budget was fairly conservative for a pre-election year, the government rhetoric continues to be positive in supporting a key driver of the Australian economy – small and medium businesses.
Jobs growth has been positive over the past year, with more than 1,000 jobs created every day. This is a good sign of the strength, confidence and ambition of small businesses.
However, I believe wage growth is still lacking. We know this all too well from the affordability issues that are occurring in the housing market. The government has taken the only sensible measure it can to assist a lack of wage growth and the cost of everyday living – announcing income tax cuts and putting more dollars in the pockets of low- and middle-income earners.
While cuts are modest, I’m hopeful that a stronger economy will lead to meaningful wage growth over the longer term as the economy continues to strengthen.
Richard Kimber, Daisee CEO and co-founder
We welcome the government’s pledge of $29.9 million to grow Australia’s capabilities in AI and machine learning.
If we’re to propel Australia to the forefront of industries such as AI, then it will require serious funding for education and research. We are on the cusp of becoming part of an AI-driven global economy and we cannot afford to fall behind.
In contrast, foreign governments in the UK and China understand the importance of AI and afford their respective industries the right vision and backing. They have already invested billions in AI with which our millions pale by comparison. That’s why they are fast becoming world leaders in the field of AI.
Simply put, AI must become a strategic focus. If we fail to act now, other countries will ‘cut our lunch.’
Flavia Tata Nardini, Fleet Space Technologies CEO
This year’s Federal budget is the first ever budget to include funding for an Australian Space Agency. This is huge. This is the moment that everything changes. In twenty years time, we will be looking back and pinpointing this period as one of the most transformational in Australian history.
Whether we realise it or not, space technology is a huge part of our daily lives. The Australian Space industry will touch the lives of each and every Australian, giving us the chance to play a growing role in this critical industry.
The $41 million assigned to the Space Agency in the Federal Budget will enable the Government to define the future of our nation as humanity takes its next great step. The funding will rapidly launch us into the next era – the fourth industrial revolution.
Alex McCauley, StartupAUS CEO
The FFF review had recommended keeping a lid on costs by introducing a $2 million cap on refunds under the scheme. Startups around the country said that would hurt them, and thankfully the Government listened, raising the cap to $4 million. We see this as a good compromise position. At the end of the day we all want a sustainable, affordable R&D incentive scheme.
The Government has also backed away from introducing a lifetime cap, which is positive. We want to make sure funds from this program continue to support legitimate startups for a long time to come. That means keeping a tight grip on the scheme’s integrity.
We’ve been saying for a while that this program has a narrow focus on research, to the exclusion of development. That makes it hard for startups – particularly in the software space – to be 100% sure about what they’re allowed to claim. A “crackdown” therefore leaves them particularly vulnerable, even in circumstances where they’re legitimate companies trying to do the right thing. The stakes are really high here for startups and founders who often rely on this scheme for the survival of their business in its early stages.
Rob Newman, Nearmap CEO
The release of the 2018 Australian Federal Budget and increased national spend on infrastructure has all eyes on proposed and impending major urban development projects around the country.
To accommodate our ever-growing population, the next 10-20 years will see a pronounced but necessary shift in Australia’s urban landscape. Transport projects like Badgery’s Creek Airport and rail link, and Perth’s Metronet will be crucial in enabling inevitable urban sprawl while still maintaining connected city centres.
It’s important that we view projects like these with a long-term lens as we are investing in a liveable Australia not only for us, but for our children and theirs to come.
Responsibility lies with government bodies and private entities overseeing these major developments to fully utilise the latest technology, ensuring major projects are well-planned, remain within budget and provide affected communities with the highest level of transparency possible.
Sam Allert, Reckon managing director
Any further support that can be afforded to small businesses will go a long way in ensuring they remain profitable and thrive. For one, the massive electricity price hike over the past several years has been crippling many small businesses across the country. In fact according to our survey of 1,000 small business owners, over half (53 per cent) want the government to better support them by lowering the cost of doing business, specifically via a reduction in electricity price (53 per cent).
If the government doesn’t step in to address the issue, it will have huge implications on small business growth as capital that could have gone into hiring new talent, investing in new technology and expanding their venture, would now have to go into solely ensuring they have an operational work space.
Trent Innes, Xero Australia MD
Small businesses, including those in regional Australia drive economic prosperity for the nation. Great to see more investment through $2.4 billion investment in public technology infrastructure. Enabling small businesses to thrive, wherever they’re based, will help solve some of the biggest challenges facing our country, such as housing affordability and unemployment.
Cash flow is key to small businesses health. At the beginning of 2018, fewer than half (49.4 percent) of Australian small businesses were cash flow positive. While that was up 2.8 percentage points year on year, more needs to be done.
The Government pledging to counter illegal phoenixing will protect small businesses from nefarious tactics to dodge payment for services. This, along with the extension of unfair contract term protections, shows that the Australian government has our small businesses at the front of mind.
Mandeep Sodhi, Haschching CEO
The Open Banking framework is going to drive a lot of competition in the financial services space, and consumers will be the winners. We’ll see the biggest benefit when this framework includes lending products such as mortgages and credit cards, as this is the area where consumers stand to save the most by switching to another lender. We know that one of the biggest barriers when it comes switching to another home loan provider is apathy.
Even if the borrower stands to save more than a hundred thousand dollars over the life of their home loan by switching to another lender (indeed, the average saving for HashChing customers refinancing is $102,800), having to go to the hassle of transferring all of their information over to another financial institution places it firmly in the “too hard basket”.
Open Banking means customers have control of their own data, which means big banks can’t hold them hostage any longer. We’re expecting to see a big upsurge in enquiries through the HashChing platform once the Open Banking framework applies to lending products.
Rob Fitzpatrick, Australian Information Industry Association CEO
We applaud the $92.4 million investment in the digital identity program and Government’s increased focus to make this a priority. The lack of a digital identity has been a handbrake on progress, so Government’s increased funding and emphasis on the delivery of GovPass, the digital identity program, shows pragmatic leadership.
Mr Fitzpatrick also called out the investment in promoting consumer data rights, as well as the additional $250 million committed to the Skilling Australians Fund. “We are particularly pleased to see the focus on encouraging women to pursue STEM careers. STEM education is important to develop the foundations that support innovation and jobs of the future.
Mike Rosenbaum, Spacer CEO and co-founder and The Sharing Hub co-founder
With the cost of living rising and everyone living longer, we encourage seniors to start some sharing economy side-hustles to benefit from the budget’s Pension Work Bonus.
From renting a campervan or RV, storage space, pet-sitting a companion or delivering parcels, side-hustles allow seniors to keep easily earning without affecting their pensions.
The Sharing Hub also welcomes the Entrepreneurship Facilitators Program, which will give $17.7million funding for entrepreneurs over 45 years of age. We are changing the way we live, work and earn and although the government has made a small step to acknowledge this, we call for a Minister for the Sharing Economy to help address this seismic shift.
James Chin Moody, Sendle CEO and co-founder
Small businesses are central to the prosperity and long term success of Australia, and it’s encouraging to see the 2018 budget preparing our country for a future that counterbalances the big end of town with the thriving small business ecosystem.
The extension of the $20,000 instant asset write-off and the investment in the $20 million SME export hubs will give this important sector a much needed leg up and help them invest for growth and tap into expansion opportunities overseas.
At Sendle we help tens of thousands of these small businesses to build their company every day, and tonight’s budget will certainly be welcomed news for them.
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