The significance of last night’s Federal Budget for 2020 has been compared to that of the early 1990’s (the last recession Australia had) as well as WW1 and II, such is the massive economic upheaval that the government is attempting to address. There is endless amounts of commentary this morning covering the $50B in tax relief, wage subsidies to get 450,000 young people into jobs, infrastructure spending and even the winding back of the R&D tax incentive crackdown. These are all big measures and targeted the usual suspects…tax, jobs and infrastructure investment.
A less talked about area involves measures to get to the heart of how business owners, and particularly those in the small business, might be able to get their house in order and reshape their businesses. Jobs are important, but post pandemic we need to be getting as much advice as possible to struggling business owners in order for them to survive and even thrive on the other side of this huge economic jolt.
I’m talking here about introducing a scheme whereby small businesses would have access to professional advice to enable businesses owners to manage through the current crisis, adapt to the new environment and aid in their recovery. It’s great that the government will subsidise wages to encourage employment of up to 450,000 young workers. However, for a business owner to take up that offer, they might first want to have a professional adviser run over the books and help establish a sound financial and business plan to give them confidence to take on a new staff member.
The concept of such a fund was tabled to the government early this year in a joint proposal by Chartered Accountants Australia and New Zealand, CPA Australia, the Institute of Public Accountants, the Institute of Certified Bookkeepers, as well as the ASBFEO and the Council of Small Business Australia. In light of the tough economic conditions, it is widely recognised across these industry bodies that tight cash flow amongst many business owners has made professional advice unaffordable. This has only increased the risk to SMEs at a time when they are in desperate need of good financial advice in order to get through the pandemic. The accounting profession in particular has been the very industry overseeing the delivery of the government’s jobkeeper stimulus measure, so it stands to reason that the government should consider this approach. Afterall, if the government is prepared to reform insolvency laws to allow certain businesses to continue trading whilst restructuring their affairs, surely it would make sense to complement this proposal with funded advice to ensure the right outcome.
I note that such a scheme was implemented by the NZ government back in April this year when the worst of the economic impact was being felt at the very beginning of the Covid pandemic. The Ardern government allocated an initial $25m to enable businesses to access expert advice and support in areas such as HR, health and wellbeing, business continuity, cashflow and finance management, strategy and digital capability. Business owners were able to access up to $5000 (excl GST) per business from the COVID-19 Business Advisory Fund. It obviously worked because only a few months later in July, the NZ government announced a $40m top up of the advice fund. There is also precedent for such a program in Australia, with Tasmania’s Business Continuity Grant program providing up to $750 for businesses in that State to access specialist accounting, legal and business planning advice.
As we look to come out of this pandemic and do so with as many SMEs intact as possible, I think it makes sense for the government to consider such a scheme and look to the advice industry to do what it does best.