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Budget a mixed bag for Illawarra business

Release Date: 8/05/2012
Tonight’s Budget was a mixed bag for businesses in the Illawarra, according to the Illawarra Business Chamber.

“The Government delivered its promised surplus but broke another promise to achieve it,” said Mr Mike Leask, CEO of the Illawarra Business Chamber.

“The decision to cancel the July 1 company tax cuts will hurt business in the region. Many businesses would have planned to use this tax cut to cover the cost of the impending carbon tax. Now they will have to cover the cost of rising energy bills themselves or risk losing customers in what is a very tough trading environment for retailers, restaurateurs and manufacturers.

“On the other hand there was some relief for those small businesses that have had a tough year. They may be eligible to offset a current year tax loss of up to $1 million against tax paid in previous years. The simplified rules for small businesses will also make it easier and quicker to depreciate investment in plant and equipment.

“Those businesses that depend on consumer spending will also be helped by the re-packaging of the Education Tax Rebate and other aspects of the Benefits of the Boom package which will put money directly into the pockets of middle and low income families. Some of this extra money will be needed to pay rising energy bills due to the carbon tax, and we know that households have been keen on saving lately. But some of it should find its way into shopping malls around the Illawarra.

“We are always keen to see more funding for key Illawarra infrastructure projects but we were not surprised that there was no extra money tonight, given the Government’s focus on returning the Budget to surplus. We should also remember that the region has benefited from recent infrastructure decisions such as the NBN rollout expansion and funding for the pre-construction stage of the Maldon-Dombarton project.”

Businesses will now turn their attention to the carbon tax and interest rates.

“Because the Federal Government is pulling around $45 billion out of the economy in a single year, to keep its surplus promise, businesses need the RBA and the retail banks to start aggressively cutting their business loan interest rates to support growth and employment in the region.

“Further cuts in interest rates should also help ease the Australian dollar, which would take the pressure of the region’s exporters such as manufacturers and educational institutions.

“Businesses will also be focusing on the impact of the carbon tax and how they are going to pay their higher energy costs without the promised company tax cut,” concluded Mr Leask.

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