As a result of the 2014/15 Federal Budget, South Australian businesses owners are expecting there to be some pain in the short to medium term whilst restoring Australia’s debt to a sustainable level.
A survey of 2500 Perks Integrated Business Services clients from the agriculture, manufacturing, services and retail industries, revealed that sixty-five percent of business owners do not believe their business will be better off as a result of the budget.
“Many local business owners are worried that some of the key measures of the budget will dampen consumer confidence which may result in a reduction in spending in the short to medium term” said Mark Roderick, Managing Director of Perks Integrated Business Services.
Some of the key measures that may impact consumer spending include the introduction of Medicare co-payments of $7 per visit, tightening of eligibility for the pharmaceutical benefits scheme and for family tax benefits for household incomes over $100,000, abolishing the dependent spouse tax offset, abolishing the seniors supplement and no dole for under 30’s until they have been out of work for 6 months.
“Our clients are also telling us they are concerned about the increasing cost of doing business” says Mark Roderick.
The fuel excise will now be indexed to CPI and whilst it won’t have a significant impact immediately it will be another ongoing and increasing cost for businesses. This is in addition to the increase in the Fringe Benefit tax rate to 49% by 2017. Again the impact won’t be immediate but it will cost businesses in terms of providing benefits to attract and retain staff.
“There is also some uncertainty about the Budget changes and their impact on the South Australian economy, with fifty-seven percent of our clients not convinced that the Budget is a good outcome for South Australia” said Mark Roderick.
However, there is a much more positive outlook around the impact the Budget will have on the future of the Australian economy. Seventy percent of survey respondents believe that the changes are good for the Australian economy.
“South Australian business owners can see the bigger picture and long term view. Yes, there will be some tough times in the short term but overall the reduction in national debt is a good thing for the Australian economy and will have a flow on effect for their businesses long term”.
Whilst there are a number of things in the Budget that have concerned business owners, there are also a number of measures announced that will have a positive impact on South Australian business. In particular, the Government has backed business by lowering the company tax rate by 1.5 percent to 28.5 percent for small and medium sized businesses.
They have also promised $944 million in funding to upgrade the North-South transport corridor. The construction phase will initially benefit engineering and construction firms as well as building product suppliers. Improved freight movements and passenger transport should assist in improving productivity for local businesses and have some impact on the wellbeing of commuters.
The introduction of the Restart initiative is another important action that will have an impact on South Australian businesses given our ageing population. As part of this initiative the Government will contribute $10,000 over 24 months for employers hiring a person aged over 50 who has been unemployed and receiving income support for 6 months or more, including the disability pension.
The Government also announced a $110 million boost to rural research and development funding as part of the Budget. This is particularly beneficial to South Australia given its strong reliance on the agricultural sector and associated food and beverage manufacturing.
“On the whole there have been both positives and negatives presented in the Budget. South Australian business owners however are very resilient and will work through the challenges presented. At Perks we’re here to assist them to manage and adapt to these challenges to ensure they thrive in the current environment” says Mark Roderick.
If you would like more information call us today on 8273 9300.
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