Federal Budget wish list is long for small businesses struggling with coronavirus
Shops without customers, tourist attractions without visitors and salons unable to operate.
That’s the reality for many businesses during the coronavirus pandemic.
Fortunes vary vastly depending on industry and location, but business owners across the country have faced a year of uncertainty and, for many, extreme hardship.
Tomorrow’s Federal Budget will reveal what and how much help small and medium businesses will be able to rely on over the next year.
So what’s on their wish lists?
How are small businesses coping with the downturn?
Nowhere is it harder trying to keep a small business afloat right now than in Melbourne.
Beauty salon manager Jessica Lloyd has only had her doors open for three months this year.
“For six months we haven’t been able to provide services,” she tells The Business.
“It’s a bit scary because we don’t know when we’re going to be able to go back to work as we know it.”
Her salon, Fresh Face Bar, will finally be able to reopen later this month under Victoria’s strict lockdown laws, but it won’t be able to offer clients the facials it’s known for because masks will remain mandatory.
“We’ve been offering online Zoom skin consultations and then we’ve also got our online store so clients can purchase products from home,” Ms Lloyd explains.
“Were still kind of helping them with their skin during this time and it’s been beneficial, I guess, in the sense of being able to help with bills and rent to keep us going.”
On Queensland’s Sunshine Coast, Janelle Rawlins is weighing up the future of her boutique.
Foot traffic at the shopfront of her ethical fashion label, the Travelling Kimono, has reduced significantly since the pandemic struck.
“Noosa’s very touristy, most of our sales are obviously based off of those holiday seasons and one of the biggest things we noticed is the Victorians, when they went into lockdown that really affected our trade,” she says.
In a town like Noosa, the hit to tourism ripples through many sectors and locals are also spending less.
“Especially for us we are a fashion label, it’s not a necessity, so people are less likely to go out and purchase something like that.”
How important has government support been?
In north-east Tasmania, the Bridestowe lavender farm is normally teeming with tourists, particularly from Asia, but managing director Robert Ravens says border closures have been crippling.
“The livelihood of up to 70 staff was at risk and it was JobKeeper that perhaps made the difference between being open and being closed,” he tells The Business.
Thanks to the Government wage subsidy Bridestowe has kept 25 employees to continue manufacturing its lavender products and maintain the fields, ready for flowering.
Mr Ravens says the reduction in the rate of JobKeeper, which came into effect last week, is a crisis for many operators in the Tasmania tourism sector.
A reversal of that decision tops his budget wish list.
“A preservation of JobKeeper at its past levels until sometime in December or later, as and when the national borders open.”
He also cites the cash flow boost, which has given small and medium businesses a credit when they lodge their business activity statements, as being crucial.
“We also received a $10,000 cash injection, that made a huge difference for us as a small business, it meant that we can continue marketing our online presence whilst we were shut with the boutique,” The Travelling Kimono’s Janelle Rawlins says.
Even for businesses that haven’t seen an immediate negative impact, Federal Government support has been critical.
“Whilst we’ve had continuity across our sites because the construction industry has largely, particularly in Canberra, kept going, we have seen challenges,” says Joanne Farrell, the general manager for Kane Constructions in the ACT.
“It’s the uncertainty about what happens after the fact knowing that we’re talking about recession now.
“We’re talking about JobKeeper and JobSeeker now being reduced, and we don’t know what next year looks like in that regard, so we are finding that our suppliers and subcontractors are starting to struggle now.”
She says those support measures need to be replaced.
“There needs to be something to supplement that in some way, shape or form — it might well be training packages or funding to get school-aged people or other people into work a lot sooner, but there needs to be a supplement.”
What’s already been announced for small business?
There’s been a few measures flagged ahead of Tuesday’s Budget specifically targeting small and medium businesses.
On Friday, the Government announced that training and reskilling provided by employers, for workers who are moving into a different role, will be exempt from fringe benefit tax.
At the moment, businesses have to pay the tax if the training provided isn’t “sufficiently connected” to an employee’s current role, but now it’ll be broadened to allow employees to retrain in new areas.
The Government will also expand the eligibility for a range of small business tax concessions.
Now, businesses with a turnover of up to $50 million will be eligible for 10 different concessions, up from the previous threshold of $10 million.
Accounting firm William Buck welcomed the changes to fringe benefit tax, but said they would be “limited in impact” and don’t come soon enough to help some businesses through the downturn.
There are also reports the Government is considering a ‘loss carry-back’ provision, for businesses that have been profitable in previous years, but will report a loss due to the pandemic.
“It effectively allows a small business that has paid tax on profits in previous years to claim back that tax offset as a loss in the current year,” the Small Business and Family Enterprise Ombudsman Kate Carnell says.
“This is a tax initiative that would result in tangible benefits for small businesses that would have otherwise been profitable if not for harsh trading restrictions and lockdowns.”
What would businesses like to see from the budget?
In Melbourne, Ms Lloyd has her fingers crossed for one-off payments to help small businesses, similar to the $3 billion announced by the Victorian Government last month.
“We’re not operating at the moment but our bills are still coming in, we still have to pay rent, so something like that would really help,” Ms Lloyd explains.
She’d also like to see more mental health support for people.
“There’s going to be a lot of people who are not feeling themselves, not feeling right and getting back into work is going to be quite difficult.
“Having some help there for both the employees and the employers would be great.”
On the west coast of the country, Rob Edwards’ real estate business isn’t in need of direct support.
“Fortunately in Western Australia we’ve handled the pandemic quite well,” says Mr Edwards, the managing director of Here Property.
“As a result we’ve had a large influx of mining workers and expats returning back to Perth and as a result the rental market is very, very strong.”
He’s hoping the Budget will contain measures to encourage workers to go to regional areas in particular.
“Since our borders have been closed, the Western Australian tourism economy has been very strong, but they’ve been struggling to get particularly overseas staff back into Western Australia to work those jobs,” he says.
He’d welcome “any incentives that the Government could place on regional work, particularly for tourism and food and beverage.”
With high-spending international tourists unable to visit the lavender farm, Mr Ravens is hoping for targeted income tax cuts to encourage locals to spend more.
“We certainly believe that in order to stimulate demand, we need to see a reduction in personal income tax levels, particularly for people earning up to $70,000 gross per annum, that would be an important step to give people more disposable income,” he says.
In Noosa, Ms Rawlins would also welcome any measures that would put more cash in shoppers’ wallets.
“When they first started the JobKeeper and there were some other stimulus packages out there, we saw a spike in sales online, which is awesome for us.
“If there’s anything else out there that is in regards to tax cuts and all that kind of thing we probably will see an increase in sales as well.”
In recent quarterly Bureau of Statistics data, construction was one of only two in 19 sectors to post job losses in the three months to August.
A carpenter by trade, with 24 years in the industry, Ms Farrell wants the Government to help more people get a start in construction.
“There’s a real lack of skills in terms of trades,” she says.
“I’m lobbying pretty hard for the Government to provide pathways and a lot more investment in funding, in particular for young females or mature aged women who are wanting to get back into the workforce, to undertake an apprenticeship.
“I think that will actually help too in terms of the economy and getting women into the industry and earning money and I think it can make a big difference if we actually invest in that area.”
Mr Ravens’ business sells lavender products around the world, and he’d welcome any Government support for exporters and aspiring exporters, to develop new markets.
“We have the luxury as a business, as the senior management of the business, to see what the rest of the world is thinking and doing,” he says.
“What we see and believe is that there will be extraordinary competition, once COVID starts to become a managed event across the globe — the competition for bodies, for product, will be enormous.
“Australia needs to accelerate its investment, its activity, if it’s going to come through the general noise that’s out there.”
How are businesses feeling about the year ahead?
While Sydney cafe owner Valerio Domenici thinks the Government has been doing “a great job with what they have”, he hopes politicians are listening to businesses owners.
“I think what they need to do is get down to the ground level and actually talk to the people who are in it day-in, day-out,” he said.
His staff are foreign workers and therefore ineligible for Government support, something he hopes will change.
“I think the Government should really look at these people and say well you know what, they make up a big part of our industries, especially the hospitality industry,” Mr Domenici says.
He will keep serving his customers, with his typical “Ciao Bella” welcome, for as long as he can.
“We really don’t know where it’s all going to go, we’re just trying to make sure that everyone is looked after and everyone knows that when they come into my cafe, it’s a COVID safe environment.”
In Perth, Rob Edwards is confident about the year ahead, but the effects of reopening borders on the real estate market remain to be seen.
“It’ll be an interesting factor to see what happens when our border restrictions are further relaxed, to see if there is a bit more fluid movement from Western Australia back to some of the eastern states, particularly for mining workers,” he says.
Kane Constructions’ Joanne Farrell is trying to stay optimistic, but there is uncertainty.
“I really don’t think we’re going to see the full impact of this on businesses until probably 12 or 18-months’ time.
“I think it’s going to come out that there’ll be a lot more people looking for work and I think that the Government will turn to the construction industry possibly to prop that up.”