The prime minister visited the governor-general this morning to dissolve the Parliament and set a federal election for May 18. The campaign will be a 35-day PR drive, and small businesses can expect to be frequently mentioned. The Coalition government and opposition Labor party alike are acutely aware that small businesses employ around half of the private sector workforce and can help swing an election. So expect a drip feed of policies from the major parties over the next 35 days.
Before we consider what the campaign might contain, let’s straighten out how the major parties compare on policies.
On tax cuts, the Coalition legislated and expedited small, medium and unincorporated tax cuts with Labor’s support. Unless an announcement is made during the election, both parties have the same business tax policies.
On access to the Australian Business Securitisation Fund and the expanded instant asset write-off, both initiatives were legislated in the last week of Parliament with opposition support. The fund will supply $2 billion to smaller banks and non-bank lenders to lend to small businesses on competitive terms. The opposition is, however, endorsing its minimum 30 percent tax on trust distributions and Australian Investment Guarantee – allowing all businesses an immediate 20 percent deduction on applicable investments above $20,000. This gives Labor a one-up on investment incentives and a markdown on higher taxes.
Personal tax cuts will be a point of difference between the two major parties, but in the short run, policies are similar. From 1 July, someone earning under $37,000 will be around $100 better off under Labor. In the long run, the Coalition has legislated and flagged broad reforms that will mostly benefit those earning more than $90,000. The opposition disagrees with this approach, pledging to repeal legislation and ignore the proposal to leave taxes as they are for those unaffected by cuts taking effect this year.
In terms of skills, the Coalition has offered to support 80,000 new apprentices and offer bigger incentives for employers. Labor has promised to almost double the funding allocation for technical and further education, including TAFE upgrades and incentives.
So with both major parties starting on a relatively level footing in terms of small business policies, what can we expect the campaign to include?
The Government will be first and foremost campaigning on its record of economic success. The opposition will campaign on dissatisfaction and argue the economy is not working for everybody.
How this relates to small business is the key to understanding what will unfold in the next 35 days. We can expect policy proposals from the Coalition including further moves on payment times and digitisation initiatives, better access to business information and protection for subcontractors. From the opposition, we know to expect a commitment to reinstate penalty rates, changes to the rules that determine minimum wage increases and greater rights for casual workers.
It is my hope that both parties campaign for measures to improve business productivity and create a business environment primed for success in a rapidly changing global economy. Xero strives to enable this productivity by connecting businesses with the accounting tools, apps and the thousands of connections business owners need in one place, available at any time, on any device. But, there is a role for governments to play to ensure that people have the skills, regulatory environment and infrastructure required to make the technology decisions that will benefit them most. The Government must move to be a digital leader by exploring how every interaction with the public functions in an economy so intertwined with digital processes it is impossible to decouple.
Broadly speaking, this election differs from recent contests in that Australians will be faced with two markedly different platforms to take the nation forward. As the small business policies from both parties become clear, we will continue to dissect them to understand how they are likely to affect the small business sector as well as its accounting and bookkeeping advisers.