Last night, the Australian Federal Government released the 2020-21 Federal Budget. Here's what the new Budget means for retailers, and how retailers are reacting.
The Federal Budget has introduced measures to support small businesses, intending to ‘drive sustainable, private sector-led growth and job creation’.
Furthermore, the Australian Federal Budget for 2020-21 includes business support and consumer stimulus, with the investment providing a ‘crucial turning point for businesses and consumer confidence.
“There can’t be an economic recovery without a retail recovery,” explained Paul Zahra, the CEO of the Australian Retailer’s Association. “The ARA has been calling for measures which encourage consumer spending and provide cash flow relief to business during this financially challenging time.
“We are pleased to see some gains across all of these areas – with highlights being the personal income tax reductions and some modest cash stimulus for welfare recipients which will boost immediate spending power, as well as the loss carry-back scheme and the wage subsidies which will both help keep more money in the bank for struggling retailers in the coming year,” he said.
Some of the biggest wins for retailers in the new Budget includes personal income tax reduction, backdated to July 1 2020. This will help free up the consumer spending power, and the cash payments of $500 for those on welfare may help stimulate further retail spend.
For businesses, the Federal Budget has introduced a $105 million loss carry-back program scheme, which provides cash benefits to loss-making businesses and companies. What does this mean? Essentially, this will put some money back into business’ pockets. “As we have seen from the protracted Victorian lockdowns, many retailers have, through no fault of their own, found themselves in a loss-making situation with mounting debts,” the ARA explained.
There has also been an expansion of the Instant Asset Write Off, which allows businesses to write off the full value of their eligible assets that were purchased for business reasons. This will help free up cash and further stimulate expansion.
Small businesses can access credit easier with the regulation of credit policy to stimulate spending. The Federal Budget is also introducing $1.2 billion wage subsidy for 100,000 new apprenticeships and traineeships, with a 50 percent wage subsidy for businesses that employ them.
There will also be an $800 million Digital Business Plan introduced under the new Federal Budget, with training, advice and support for SMEs. Moreover, the Australian Federal Government is introducing the FBT Exemption for skills training, which can support businesses to retrain their staff for further digital and online skills.
“The challenge set for the Treasurer in this Budget was to deliver a plan to jumpstart the economy out of hibernation, by encouraging businesses to hire and invest and households to spend,” explained Trent Innes, the Managing Director at Xero Australia and Asia.
“It was pleasing to see that 11 million taxpayers will receive tax cuts, backdated to July 2020. The best way for people to help boost the economy and jobs is to spend these tax cuts – particularly in small businesses.
“Digital solutions will play an important role in implementing many of the policies in this Budget. It was great to see the recent announcements to help small businesses shift to digital solutions such as the Jobmaker Digital Business Plan and the Cyber Security Plan. Any measures to give business owners better access to technology will increase capacity and help them to take advantage of the many other business-related announcements,” Innes said.
For women within retail, the Federal Budget aims to increase safety and training at work and home. The Budget includes $240 million towards the Women’s Economic Security Statement.
“As with every budget, the devil is in the detail. Retail is the largest private-sector employer, and we look forward to understanding more specifically how the retail industry will be supported through the various skills and training programs to position it to thrive,” Zahra explained.
“We remain keen to see certainty around the continuation of JobSeeker, which will provide significant consumer spending power and confidence.
“Retail is a predominantly female sector, particularly in the area of frontline jobs – and whilst we applaud the support for women, childcare support remains a hurdle we would like to see addressed,” he said.
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