Australian Economy

What SMEs and startups can expect after Labor’s election victory

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For the first time in nine years, Australia will start its week with a Federal Labor government.

While still early days, here’s what the small business and startup sector can expect from the government of Anthony Albanese in the weeks to come.

What does the Albanese government plan to do?

The final tally is yet to be determined and Albanese is yet to be sworn in as Prime Minister but his Saturday night victory speech outlined how his government might operate in its opening days.

Climate a key focus

After confirming his government would enact the Uluru Statement from the Heart in full, Albanese declared his party would take “the opportunity to shape change, rather than be shaped by it”.

Unsurprisingly, that pledge flowed into a broad take on Labor’s climate platform.

Following what has been branded Australia’s climate election, in which once-safe Liberal Party seats fell to environmentally-focused independents, Albanese said, “together, we can take advantage of the opportunity for Australia to be a renewable energy superpower”.

Climate-backed policies with a potential affect on small business include Labor’s electric car discount policy, which is projected to cost $54.3 million in 2022-2023.

Labor has also pledged to invest $20 billion to revamp the power grid, enabling more renewable electricity generation to power homes and businesses. It claims the ‘Powering Australia’ program will create in excess of 600,000 jobs.

Those promises won’t be realised overnight — but from day one, an emissions-focused crossbench is sure to push Labor on its climate claims; a policy focus which will inevitably hit the small business and startup sector.

Labor’s business and union summit

Albanese’s climate talk then flowed into more traditional ALP fare.

“Together we can work in common interests with business and unions to drive productivity, lift wages and profits,” he declared.

It tracks with Albanese’s commitment to convene a meeting of employers and organised labour within his first 100 days as prime minister.

That gathering will inform the Labor government’s ‘white paper’ on employment, a document likely to express the new government’s approach to the gig economy and insecure work.

Despite thanking the “members of the mighty trade union movement”, Albanese did not specifically mention small business or the startup scene in his victory speech.

However, Labor has pledged to push for least-cost routing, lowering merchant fees for traders, and cap its invoice payment times to 30 days, proving certainty to SMEs servicing government contracts.

Prior to the election, the ALP also promised to standardise the kinds of business support packages accessible by SMEs after a disaster, reworking the latticework of payments currently available to hard-hit businesses.

Wages, entitlements to the fore

With victory now in his sights, Albanese also reflected on his campaign claim that Labor would back a minimum wage increase of at least 5.1%, in line with headline inflation.

“If the Fair Work Commission doesn’t cut the wage of minimum aged workers, we can say that we welcome that absolutely,” he said.

Any change to the minimum wage would come into effect on July 1, giving Labor a relatively short time to finalise its position on a pay hike.

Other working entitlements are front-of-mind for Labor, too, with implications for the small business and startup scene.

Albanese pledged to “protect” universal superannuation, move ahead with its multi-billion dollar universal child care package, and help to make “equal opportunity for women a national economic and social priority”.

Above and beyond Albanese’s speech, the new federal treasurer — all but certainly Jim Chalmers — will deliver Labor’s economic outlook document in June.

That paper will build on the party’s federal budget response, and the policy costings document submitted just days before the election.

Grants

Beyond Albanese’s speech, a new government means a new approach to small business and startup grants.

In its policy costings, Labor said it would invest $1.7 million in the 2022-2023 financial year to its Startup Year project, an initiative offering income-linked loans to entrepreneurs operating within government-approved accelerator schemes.

Startup Year funding will grow each year to $5 million in 2025-2026, Labor said, eventually providing financial backing to 2,000 final year and early career entrepreneurs.

Labor’s local industry grants is expected to provide $87.1 million in funding across 2022-2023.

The Albanese government has also committed to reducing the pool of uncommitted funding through the Entrepreneurs Program by nearly $200 million by 2025-206.

Who is stepping up?

Before Labor enacts its plans for the small business and Australia’s startup sector, it must confirm its A-team lineup.

As above, Chalmers is set to drop the ‘Shadow’ from Shadow Treasurer, replacing the outgoing Josh Frydenberg.

While Labor’s campaign underlined insecure employment as a major issue, Chalmers took a welcoming approach to the business sector during the campaign.

“You know, we want to be a pro-business, pro-employer, Labor Party,” Chalmers told a Q&A session after a May address at the National Press Club.

Meanwhile, Senator Katy Gallagher appears set as Labor’s Minister for Finance.

Richard Marles, Labor Deputy leader and Shadow Minister for National Reconstruction, Employment, Skills and Small Business, could succeed Stuart Robert in the portfolio.

Likewise, Shadow Minister for Industrial Relations Tony Burke, and Shadow Minister for Industry and Innovation Ed Husic, are likely to retain those roles in government.

Albanese, Chalmers, Gallagher, and Marles will today be sworn in by Governor-General David Hurley, ahead of Albanese’s first high-profile event as Prime Minister: a Quad meeting with US President Joe Biden, Japanese Prime Minister Fumio Kishida, and Indian Prime Minister Nahendra Modi on May 24.

Penny Wong, set to become Minister for Foreign Affairs, will join Albanese for the Tokyo meeting.

What challenges do they face?

The honeymoon won’t last long: Labor has inherited an Australian economy which is far stronger than many had projected in the depths of COVID-19 lockdowns, but runaway inflation is now amplifying the cost of living.

Another conundrum awaits in September, when the six-month elimination of the fuel excise, brought in by the Morrison government, comes to an end.

While repealing the measure may make sense from a budgetary standpoint, it will still serve as a de facto price hike for motorists and small businesses.

The Reserve Bank of Australia is also raising interest rates to combat inflation.

While it was the Coalition which faced the first official cash rate hike in more than a decade, the Albanese government can expect more in the weeks and months to come, pushing up loan repayments for homeowners and businesses nationwide.

Labour shortages continue to hamper key sectors, including the tech industry, construction and hospitality. But Labor’s ambitious skills plan, founded on 465,000 fee-free TAFE places and an expansion of university places, will still take years to produce the next crop of skilled workers.

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