Hockey warns it’s not easy as he slashes business assistance but cuts company tax: Budget 2014

In his first budget Treasurer Joe Hockey has taken the axe to a range of measures designed to assist SMEs while sticking to the government’s promise to lower the company tax rate.

The government will abolish key business programs including Commercialisation Australia, Enterprise Solutions and the Innovation Investment Fund and will redirect the savings into other budget areas and the establishment of an Entrepreneurs Investment Program. 

“We know that for some in the community this budget will not be easy,” Hockey said in his budget speech.   

“I say to the business community we need you to help out.  Rather than corporate welfare, the government’s focus will be on strengthening the overall business environment, so that enterprise, large and small, can create more jobs in Australia.”

Hockey claims despite the cuts the government will improve business opportunities by sticking to its promise to lower the company tax rate to 28.5%.   

He says the 1.5% cut will help 800,000 businesses although the budget does not contain any provision for the company tax cut.  

The key budget measures that will impact SMEs are:

• Cutting the company tax rate to 28.5%;
• Scrapping schemes to support apprentices and instead providing a loan program;
• Scrapping Commercialisation Australia, Enterprise Solutions and other assistance schemes and replacing them with the Entrepreneurs Investment Program; 
• Extending unfair contract provisions to small business;
• Abolishing the Small Business Commissioner to be replaced by a Small Business Ombudsman with more far ranging powers;
• Wage subsidy program of up to $10,000 for businesses which employ older workers;

The budget also:

• Links increases in pensions to inflation;
• Reduces the income threshold for Family Tax Benefit Part B to $100,000;
• Freezes pay for one year for politicians, judges and senior public servants;
• Allows direct financial assistance for students studying diploma and sub bachelor degree courses;
• Switches unemployed people under the age of 25 from Newstart to Youth Allowance; 
• Provides for a $20 billion Medical Research Future Fund;

The budget confirmed measures previously reported including:

• A debt levy for high income earners;
• A Paid Parental Leave scheme with a cap of $100,000;
• A higher level of fuel excise tax;
• Increase in the pension age to 70 by 2035;
• The abolition of 70 government agencies;

“Doing nothing is not an option. The days of borrow and spend have come to an end,” Hockey said in his speech.

But the Opposition branded the budget a “broken promises budget” before it was even released.

"This is a budget of broken promises and twisted priorities," Opposition Leader Bill Shorten said.

This article first appeared on SmartCompany.