As the Federal Election edges closer, there have been several late announcements coming from both sides of government in an attempt to snag the startup and SME sector. Here’s the low down.
D-Day has almost arrived for both the Coalition government and the ALP opposition, with only a couple of weeks remaining for them to give it their all and win over the hearts of Australian voters.
But since the release of the Federal Budget, one of the big questions of this election has been about what’s in store for SMEs and startups.
And over the last couple of weeks some big announcements have finally surfaced, giving a clarity as to where each party sits when it comes to their support of small and early stage businesses.
A common problem among SMEs is the difficulty they experience in raising capital for their businesses without having to give away control of their business.
At present, there are three primary methods for SMEs to get their hands on cash: private equity, debt financing and/or government funding.
While each of these methods can help businesses survive critical growth phases, they also tend to come with significant challenges that make it difficult to propel the business further.
In a bid to give SMEs (meaning, businesses that turn over between $2 million and $10 million in annual revenue) easier access to cash while retaining their autonomy, the Morrison government has promised SMEs a $1 billion equity investment growth fund.
If the Liberal Party is re-elected this May, the fund promises to bring the Government, banks and superannuation providers together and offer equity investment to businesses with promising growth prospects.
When asked why he is offering this funding to SMEs, Prime Minister Scott Morrison told ABC News Breakfast that SMEs were “the ones who pay Australia’s wages” and therefore need to be sustained with “lower taxes and greater support”.
The equity taken by the private sector as part of this fund will be capped at 40 percent, which means that the beneficiaries the fund will receive the cash while retaining the majority shareholding of their respective businesses.
Throughout his election campaign, Opposition Leader Bill Shorten has put a significant emphasis on employee wages, often referring to the campaign as a “referendum on wages” in many instances.
In a recent announcement, Shorten came out to bat for employees who are hired on a casual basis, promising to lead them to an “easier pathway” to full-time employment.
According to the Sydney Morning Herald, Shorten intends to improve job security for one in four Australians by making it easier for them to convert their employment status from casual to full-time after a 12-month period.
“Too often, long-term casual work is used as a mechanism to pay workers less, deprive them of leave, and make them easier to sack,” Shorten said.
As part of Shorten’s promise, employees who have been working at full-time capacity with a casual employment status will have the right to request a conversion to full-time status and receive the subsequent benefits (including sick and annual leave, superannuation, and so on.)
If the employer refuses to honour this request, the casual employee will have the right to an appeal process through the Fair Work Commission.
In one of the first announcements on the support of early stage startups, the ALP has said they intend to exempt startups from the announced changes to the R&D Tax Incentive.
The R&D Tax Incentive has been offering loss-making startup businesses significant cash benefits that have been keeping those startups afloat throughout their product build and proof-of-concept phases.
But in last year’s Federal Budget, the Liberal Party announced large cuts to the incentive, as well as revealing their intentions to increase reviews and crack down on eligibility.
Some of these reviews have led to large startups like Airtasker and Digivizer being required to pay back millions of dollars as a result of having their R&D claims retrospectively disallowed.
Earlier this year, Commonwealth Bank was also forced to pay back enormous sums of money as part of this crack down.
If elected, the ALP have now promised to not only protect startups from the proposed changes, but also run a six-month review into how they can boost Australia’s R&D spend.
In an interview with the Australian Financial Review, Shadow Industry Minister Kim Carr said that the ALP does intend to maintain the integrity of the incentive, but will also put efforts into ensuring that its beneficiaries aren’t “treated unjustly”.
While the Morrison government is yet to comment on their concrete plans with the incentive and its changes if they get re-elected, Senator Carr’s statement was warmly welcomed by the startup community.