Big spending commitments, a focus on jobs, and an eye on a possible early election is how the 2021 Budget could be summed up.
Overall, we think measures announced by the Treasurer last week will be beneficial to retailers.
The COVID-recession was unique in the sense that late last year discretionary spending was at record-highs. Normally during an economic downturn consumers tighten their belts as they simply don’t have the cash to make non-essential purchases, but JobKeeper and high levels of disposable income saw retail sales boom during Christmas.
Nationwide turnover for the first few months of 2021 show that consumers are slowly starting to wind down their spending. This was always going to happen, but what we don’t want to see is spending levels crash through the floor. Which is why the NRA was glad to see the tax offset for those earning between $48,000 and $90,000 extended for another year. Consumers in this income bracket tend to spend whatever money they have left over after essential purchases, so we’re confident that this will keep retail sales ticking along.
It was also good to see the instant asset write-off extended for a further 12 months. This measure has been announced in every Budget since 2015 and we have advocated for it to be made permanent. For the following 12 months any business with a turnover of up to $5 billion will be eligible, meaning that 99 per cent of Australian businesses will be able to take advantage of this initiative. Once again, this measure will drive investment and help many of you obtain state-of-the-art equipment to run your business.
The Treasurer also outlined $134 million in funding for regulatory technology (regtech) to support small businesses navigate the Modern Awards system. This complex maze of regulations is difficult for any business to understand, but particularly bad for smaller operators who lack sufficient internal resources. This funding commitment will help smaller employers comply with the Modern Awards, provide data on pay conditions and improve the overall accuracy of payroll software.
More than half the retail workforce is female. Therefore, the $3.4 billion women’s support package aimed at improving women’s safety, economic security, health and wellbeing is most certainly welcomed. In includes a doubling of domestic violence prevention funding; more than $20 million to implement recommendations from the Respect@Work report; and over $100 million in women’s health initiatives. Although this is a good start, it is merely the first step in the right direction and more will need to be done in the future.
However, one area of concern is there seems to be little in the Budget to assist tourist destinations and their local economies. Unquestionably, tourism has been one of the hardest hit industries during the pandemic. The Government has previously implemented a $1.2 billion support package for the aviation sector, but we are concerned that this is not enough. The international border is still a long way off from opening, while Australians remain wary about domestic travel due to the potential for snap state border closures. The NRA will keep a close eye on how these economies perform in the coming months and will advocate for any necessary stimulus measures.
All in all, we are confident that the Budget will keep the Australian economy heading in the right direction. Challenges remain and the future is still somewhat uncertain, but Australia is certainly better placed than other nations and we hope that manifests itself between now and when this pandemic is finally over.
All the best for the week ahead.