Budget Review 2021–22 Index

Liz Wakerly

The 2021–22 Budget contained several measures designed to boost manufacturing, encourage industry and help small businesses. Some are sector-specific; others relate to regional businesses. Some are new initiatives; others extend existing programs. A number of measures for industry and small business are included in the Commonwealth’s Deregulation Agenda, a continued COVID-19 response package (focusing on the aviation and tourism sectors), the Digital Economy Strategy, and the Women’s Economic Security Package (contained within the Women’s Budget Statement).

There is a mix of grants, tax incentives, apprenticeship/training programs and deregulation measures. This article and Table 1 summarise the main new spending commitments pertinent to industry and small business. Identified payment commitments total $425.2 million. Reductions in receipts—mostly attributable to a temporary measure allowing businesses to deduct any eligible expense immediately (and so reduce taxable income), rather than in the future—reach more than $18.1 billion.

Some of the sector-wide initiatives, for example under the Women’s Economic Security Package, and funding for industry-based scholarships and other training, are explored in the ‘Women’s safety and economic security’ and ‘Higher education’ articles in the 2021–22 Budget Review. Support for the energy sector is summarised in the ‘Australia’s ‘gas fired’ recovery: How are we tracking?’ article.

Sector-specific measures

The Australian Space Agency will receive $13.3 million over four years from 2021–22 (and $3.3 million per year ongoing) to ‘increase its regulatory and technical advisory capacity’ under the Space (Launches and Returns) Act 2018 and to ‘support the growth of the industry’ (Budget Measures: Budget Paper No. 2: 2021–22, p. 137). Funding was first provided for the space industry in the 2018–19 Budget. According to the Minister for Industry, Science and Technology, Christian Porter:

Space is the new frontier for modern manufacturing and is one of the Government’s six National Manufacturing Priorities. Roadmaps developed with industry have recently been released by the Morrison Government to inform the long-term strategy in each of these priority industries, including space, and to help capture exciting new opportunities to grow these sectors and create jobs.

The Australian fashion industry will receive $1 million over two years from 2020–21 to support the growth of the sector by ‘promoting demand creation and increased recognition of the innovation and design capabilities in Australian fashion’ (Budget Paper No. 2, p. 144). The Industry, Science, Energy and Resources Portfolio Budget Statement (p. 39) notes that this will go to the Australian Fashion Council to create a Fashion Certification Trade Mark.

Funding is being provided to the Department of Industry, Science, Energy and Resources (DISER) (Portfolio Budget Statements 2021–22: Budget Related Paper No. 1.9: Industry, Science, Energy and Resources Portfolio, p.24) to work with the Department of Health to develop an onshore mRNA vaccine manufacturing capability in Australia. Funding is not for publication (nfp) due to ‘commercial in confidence sensitivities’, but activities include ‘approaching the Australian market for a long-term sovereign mRNA manufacturing capability to establish end-to-end onshore capability’ (see also the ‘Science and Research’ article).

To ‘assist the growth of Australia’s craft brewing and distilling industry’, from 1 July 2021 eligible brewers and distillers will receive full remission (up from 60%) of any excise they pay on the alcohol they produce, up to a cap of $350,000 each financial year (up from $100,000). This measure aligns the benefit under the existing Excise Refund Scheme for brewers and distillers with the existing Wine Equalisation Tax Producer Rebate. It is expected to cost the Treasury $225 million in tax receipts over the forward estimates (Budget Paper No. 2, p. 12).

The automotive research and development tariff concession has been extended (from 1 April 2021) until 30 June 2025 to keep high-end research activities in Australia and maintain support for high-wage jobs. The measure is estimated to decrease receipts by $1.7 million over the forward estimates period (Budget Paper No. 2, p. 9).

The Government will provide $1.8 billion over four years from 2020–21 to continue to support the aviation and tourism sectors as part of the Government’s response to the COVID-19 pandemic, to support transition to recovery, and to stimulate tourism (Budget Paper No. 2, pp. 69–71 and media release). It is not clear how much of this support is additional to that previously announced. Only $285.2 million is identified in Budget Paper No. 2 (p. 69).

Access to the $94.6 million Zoos and Aquarium program will be extended by six months to support zoos, aquariums and wildlife parks to maintain their animal populations where their tourism revenue has been affected by travel and social distancing restrictions. The Government will also provide $14.1 million over three years from 2021–22 to the Great Barrier Reef Marine Park Authority to support tourism and to conduct a review of the Authority’s current charging structure (Budget Paper No. 2, p. 71).

Deregulation

A number of initiatives under the Commonwealth’s Deregulation Agenda will benefit business.

A total of $10 million has been allocated over four years from 2021–22 to modernise business communication by amending legislation in the Treasury Portfolio to be technology-neutral (Budget Paper No. 2, p. 68). According to a 20 April 2021 media release from the Assistant Minister to the Prime Minister and Cabinet, Ben Morton, this refers to:

Legislative reform to key pieces of legislation in the Treasury portfolio, including those governing corporations, credit, superannuation and insurance, will provide tangible, broad-ranging benefits for businesses of all sizes by enabling greater flexibility in the way they communicate with each other, individuals and regulators.

Funding of $7.2 million over three years from 2021–22 will be provided to invest in the improvement, maintenance and review of the Employment Contract Tool (developed by the multi-government agency Employing Your First Person Taskforce and available on business.gov.au) which helps small-business employers to make basic employment contracts that comply with workplace laws (Budget Paper No. 2, p. 68).

Some $3.9 million over two years from 2021–22 will be provided to enable reviews to increase the transparency and accountability of regulator cost recovery activities and reduce cost to business on an ongoing basis (Budget Paper No. 2, p. 68). It is not clear who will be undertaking the reviews.

Funding of $0.8 million (to be met from within the existing resources of the Department of the Prime Minister and Cabinet and the Attorney-General’s Department) has been allocated to the examination of options that enable electronic document execution. Temporary regulatory relief allowed company officers to execute documents with electronic signatures (rather than requiring all signatories to sign the same physical document) during the coronavirus crisis, but this expired on 21 March 2021 (see media release). Reforms to statutory declarations laws and common law of deeds to allow electronic document execution ‘could realise an estimated $400 million in economic benefits for small and medium enterprises every year’ (see media release).

Digital Economy Strategy

The cross-portfolio Digital Economy Strategy is being partially funded by savings of $18.1 million over five years from 2021–22 (and an additional $4.2 million per year ongoing from 2025–26) by reducing funding for the Incubator Support Programme (now closed) and the Business Research and Innovation Initiative (closes 3 June 2021) (Budget Paper No. 2, p. 76). It includes the following measures relevant to industry:

• $53.8 million over four years from 2021–22 to create a National AI Centre (within CSIRO’s Data61) and four AI and Digital Capability Centres to ‘drive and support small and medium enterprises … to adopt and use transformative artificial intelligence technologies’ (Budget Paper No. 2, p. 73). The Digital Capability Centres will be appointed through a competitive process focusing on specific applications of AI, such as robotics or AI-assisted manufacturing (see factsheet).
• $33.7 million over four years from 2021–22 to provide grants to businesses to work with the Government to develop AI-based solutions to solve national challenges (Budget Paper No. 2, p. 73). Challenges will focus on the industry sectors of AI specialisation identified in: the Artificial Intelligence Roadmap; the National Science and Research Priorities; CSIRO Missions; and the Modern Manufacturing Strategy (see factsheet).
• $12 million over five years from 2021–22 to deliver co-funded grants to support community and business-driven projects that build AI capabilities in regional areas (Budget Paper No. 2, p. 73). Applicants can include universities and publicly funded research bodies, technology companies and regional businesses, including small and medium businesses (SMEs) and start-ups (see factsheet).
• $18.8 million over four years from 2021–22 for a Digital Games Tax Offset to provide a 30% refundable tax offset for eligible businesses that spend a minimum of $0.5 million on qualifying Australian digital games expenditure (Budget Paper No. 2, p. 73). The Digital Games Tax Offset will be available from 1 July 2022 (see factsheet).
• $43.8 million over three years from 2021–22 to expand the Cyber Security Skills Partnership Innovation Fund for industry and education providers to deliver more projects that meet local requirements to quickly improve the quality and quantity of cybersecurity professionals in Australia (see factsheet), and to ‘further secure and build capability across national priority sectors identified in the Modern Manufacturing Strategy’ (Budget Paper No. 2, p. 74).
• $10.7 million over three years from 2021–22 to trial up to four industry-led four-to-six month Digital Skills Cadetship pilots to develop new and innovative pathways to increase the number of Australians with high-level digital skills (Budget Paper No. 2, p. 75).
• $22.6 million over six years to establish the Next Generation Emerging Technologies Graduate Program to provide up to 234 scholarships to support emerging technologies areas identified through the Modern Manufacturing Strategy (Budget Paper No. 2, p. 74).
• $24.7 million over six years to establish the Next Generation AI Graduates Program to attract and train up to 234 AI specialists through competitive national scholarships (Budget Paper No. 2, p. 73).

Other measures likely to benefit industry

A number of other measures—from anti-dumping reforms, to a temporary expensing extension, to skills development—will also benefit industry. Funding of $5 million over the forward estimates (and $1.4 million per year ongoing from 2025–26) has been provided for anti-dumping reforms which include:

• $4.7 million over four years from 2021–22 (and $1.3 million per year ongoing) to the Anti-Dumping Commission, to provide advice to importers and local manufacturers on whether goods are subject to anti-dumping duties (Budget Paper No. 2, p. 136).
• $0.1 million over four years from 2021–22 (including $30,000 per year ongoing) to support the International Trade Remedies Advisory Service, to assist SMEs with the anti-dumping merits review process (Budget Paper No. 2, p. 136).

In a 12-month extension of an existing temporary measure designed to encourage business investment, businesses with aggregated turnover or total income of less than $5 billion will be allowed to deduct the full cost of eligible depreciable assets acquired from 6 October 2020 and used or installed ready for use by 30 June 2023. The aim is to encourage businesses to make further investments, particularly in projects requiring longer planning times. The temporary full expensing extension is expected to reduce tax receipts by $17.9 billion over the forward estimates period (Budget Paper No. 2, p. 29).

Under its Supporting Regional Australia program, the Government has committed to ‘support to undertake an independent study to identify the regulatory barriers to business relocation into regional Australia’ (Budget Paper No. 2, p. 169). The funding for this report is not disclosed due to ‘commercial sensitivities’.

Part of the Women’s Economic Security Package includes $42.4 million over seven years from 2021–22 to establish the Boosting the Next Generation of Women in Science, Technology, Engineering and Mathematics (STEM) Program by co-funding scholarships for women in STEM in partnership with industry (Budget 2021–22: Women’s Budget Statement 2021–22, p. 53).

The Government will provide $89.3 million over four years from 2021–22 ongoing to extend the eligibility from 1 July 2021 of the Tasmanian Freight Equalisation Scheme assistance to eligible imported goods (shipped to Tasmania via a mainland port) with no direct Australian-made equivalent. (Nearly 70% of the cost of the measure will be partially met from ‘within existing resources’ of the Department of Infrastructure, Transport, Regional Development and Communications). The aim of the measure is to provide greater assistance to Tasmanian agriculture, forestry and fisheries, manufacturing and mining industries (Budget Paper No. 2, p. 170).

Measures to assist small and medium businesses

The SME Recovery Loan Scheme is being extended to SMEs with a turnover of up to $250 million (up from $50 million) which have been recipients of the JobKeeper Payment between 4 January 2021 and 28 March 2021 or which are located or operating in a local government area that has been disaster declared as a result of the March 2021 New South Wales floods and were negatively economically impacted (Budget Paper No. 2, p. 191). The Government will provide participating lenders with a guarantee for 80% of secured or unsecured loans (up from 50%) of up to $5 million (up from $1 million) for a term of up to 10 years (up from 5 years). Lenders will be able to offer borrowers a repayment pause of up to two years. The financial implications of this measure are nfp due to ‘commercial sensitivities’.

Budget Paper No. 2 (p. 19) identifies increased powers (to pause or modify Australian Taxation Office debt recovery in relation to disputed debts) for the Administrative Appeals Tribunal in relation to small business taxation decisions. This measure is estimated to result in a ‘small but unquantifiable decrease in receipts’ over the forward estimates.

To support SME participation in Commonwealth procurement, $2.6 million (over four years from 2021–22) will be provided to map any common ‘pain points’ for SMEs in the procurement process; target ‘Government Procurement Learning Events’; mandate the use of ‘Dynamic Sourcing for Panels’ and undertake a pilot of direct engagement of SMEs by the DISER for contracts up to $200,000 (Budget Paper No. 2, p. 145).

Under the Digital Economy Strategy, measures designed to assist SMEs include:

• $12.7 million in 2021–22 for Digital Solutions providers to expand the reach of the Australian Small Business Advisory Service Digital Solutions program to up to 17,000 small businesses (see factsheet) and
• $15.3 million over three years from 2021–22 for Treasury and the Australian Peppol E-Invoicing Authority to promote and accelerate the awareness and adoption of  e-invoicing by businesses and across all levels of Government (see factsheet).

In measures designed to build the Australian workforce, ‘cement’ Australia’s recovery and ‘secure’ her future prosperity, the Minister for Employment, Workforce, Skills, Small and Family Business, Stuart Robert, identified the following:

• $8 million for a two-year campaign to encourage people to support their local small and family-owned businesses as they recover from the impacts of the COVID-19 pandemic
• $0.9 million over four years from 2021–22 to support small-business owners to take proactive, preventative and early steps to improve their mental wellbeing through the Ahead for Business program and
• an extra $1.5 million for the Australian Small Business and Family Enterprise Ombudsman to help small businesses identify and access support for dispute resolutions.

Providing $15.5 million over two years from 2020–21 for an additional 1,000 places under the New Business Assistance with New Enterprise Incentive Scheme program and an additional 350 places under the Exploring Being My Own Boss Workshop program, is designed to encourage more people to start their own small business (Budget Paper No. 2, p. 90).

Under Building Australia’s Resilience, rural and regional small businesses affected by drought, COVID-19 or the 2019–20 bushfires are eligible for (a share of) $8.5 million in support, which has been extended for a further six months (Budget Paper No. 2, p. 66).

Additional funding of $16 million over four years from 2020–21 has been allocated to ensuring the ‘effective operation’ of the Payment Times Reporting Scheme that came into effect on 1 January 2021. The scheme requires large businesses to report on their payment times to small businesses (Budget Paper No. 2, p. 186). It is designed to: increase transparency around the payment performance of large businesses; help small businesses decide who to do business with; create incentives for improved payment times and practices; and help the public make decisions about the large businesses they buy from. Research from 2019 (see DISER website) suggested that normalising a 30-day payment time from large business to small businesses could have an estimated net benefit to the Australian economy of $313 million per year.

Table 1: new commitments in the 2021–22 Budget for industry and small business

Source: Budget Paper No. 2.