Since Prime Minister Anthony Albanese called the federal election for 3 May 2025, both sides of the political divide have drawn their battlelines in the race to The Lodge.
What’s sorely missing from both of the major parties in their laundry list of promises? A strong focus or significant commitment to helping small businesses.
This is surprising given that there are approximately 2.5 million small businesses in Australia, who employ over 5.1 million workers, meaning a large section of the voting populations seems to have been largely forgotten. This election should place small and medium-sized businesses at the centre of any economic growth agenda, not push them off to the side.
Here we unpack the offerings announced so far for small businesses.
Fuelling Entrepreneurship
The Coalition has stated it wants to encourage more people to start and grow their own small business. Opposition leader, Peter Dutton, outlined the Liberal Party’s vision of growing the number of small businesses in Australia by 350,000 in four years.
Central to the plan is the offer of tax incentives. A new small business would only pay tax on a portion of their income in their first three years of operation. Proposed as the "entrepreneurship accelerator" scheme, businesses would pay tax on 25 per cent of the first $100,000 of income in the first year. They would then only be taxed on 50 per cent of the second $100,000 earned.
To be eligible, a company must be incorporated in Australia and meet the definition of a small business. It must have an aggregated turnover of less than $10 million and fewer than 20 employees.
In year two, the business would pay tax on 40 per cent of the first $100,000 of income, and 60 per cent of the second $100,000. And in its third year of operation pay tax on half of the first $100,000 of income, and 70 per cent of the second $100,000.
Mr Dutton said the "entrepreneurship accelerator" scheme is designed to provide people with the confidence to join the other 2.5 million other small business owners and start their own new business.
The rising costs of doing business
Inflation, rent increases, supply chain difficulties and cash flow are areas of concern. But it’s the big-ticket items of wages and the rising cost of utilities that tops the list of challenges for small business owners.
The Labor government announced it is extending its energy bill relief plan for six months to the end of 2025. This is expected to benefit around one million small businesses who will receive up to $150 in rebates directly off their energy bills.
While it is welcome, when you consider electricity can cost some retail shops up to $10,000 per year, while cafes, restaurants and manufacturing businesses spend up to $20,000 per year, the $150 doesn’t even cover the electricity cost for one week.
Added to this, there are expected future energy cost increases of between 4.2% and 8.2% meaning the energy bill relief is not worth getting too excited about. This not only takes its toll financially on small business owners, but also physically and mentally.
Maximising the minimum wage
The Prime Minister announced his support for an increase to Australia's minimum wage. In its submission to the Fair Work Commission’s annual wage review, The Labor Government recommended minimum award wages to have “an economically sustainable real wage increase”. Whatever the new national minimum wage, it will be in addition to the 0.5% rise in the Superannuation Guarantee, which also comes into effect from 1 July 2025.
For small business owners this means a very delicate balance between raising prices to cover costs without losing customers. A consequence of countering rising costs is reducing staff numbers or employee hours.
Employers should prepare for a July wage rise by adjusting budgets. Peninsula can keep you informed every step of the way to ensure you are aware of the latest minimum wage and/or award rates.
Growing competition pains
If re-elected, Labor has indicated making non-compete clauses in some employment contracts unenforceable for workers earning less than the high-income threshold from 2027.
Non-compete clauses limit workers moving into similar roles at competitor businesses or starting their own business in the same industry. The plan to ban non-compete clauses is being promoted as a way to increase worker mobility by removing barriers for workers looking to secure a higher-paid role.
While yet to be finalised, this proposal will be welcomed by some businesses looking to secure highly skilled staff and strongly opposed by others wanting to retain their top performers and to maintain their intellectual property.
Instant asset write off is a bit of a write off
Small business owners would gladly welcome an expansion of the instant asset write-off. In its current form, a business with a turnover below $10 million can immediately deduct the cost of assets up to $20,000, rather than depreciate them over time. This is designed to encourage small businesses to invest in their own productivity.
If the Labor government wins the election it has pledged to extend the instant asset write off for another 12 months to 30 June 2026. There has so far been no mention of what would happen beyond this date.
As a counter to Labor’s instant asset write off plan, the Coalition has pledged to offer a permanent $30,000 instant write-off. Additionally, they are looking to introduce a $20,000 meal and entertainment tax deduction for an initial two years (alcohol excluded). These proposals have been developed to encourage spending in the hospitality sector and help small business.
Voters are heading to the polls in in a couple of short weeks. And so far, both sides of politics have offered up uninspiring policies for the small business community. With the prediction of a very tight election race, the party that comes to through with strategies to do more for Australia’s 2.5 million small businesses could feel the elation of victory over defeat.
Peninsula provides thousands of small businesses with expert advice on HR and WHS issues including employee entitlements, employment contracts and modern awards. Call for free initial advice.
This article is for general information purposes only. Peninsula Australia does not represent or endorse any political party, member or candidate.