What does the 2016 Budget Mean for the Manufacturing Industry?
The Australian Government’s budget announcement for 2016 has positive consequences, specifically for small businesses in Australia, including many of the food manufacturing companies within the industry.
Most notable are two key announcements:
Firstly: the decision to extend the $20, 000 instant asset write-off scheme to businesses with a turnover of up to $10 million. Previously at a cap of $2 million, Treasurer Scott Morrison announced the increase as part of the government’s ambition for smaller business to become bigger businesses. Scope for growth will come with a sigh of relief for business owners and manufacturers who will feel equipped to grow, regardless of overrunning caps or limits.
The instant asset write-off, which was first announced in the 2015-16 budget, allows manufacturers to purchase equipment under $20, 000 and receive an instant asset write-off. This allows the opportunity for business owners and managers to update or upkeep technology and resources, meaning business can be more efficient and safer. Of course, bringing in new technology ultimately means the end product will increase in value, a positive return for manufacturers.
Secondly: the decrease in small business company tax rate to 27.5% is also positive, especially as the current government plans to continue the trend and after some years have all business tax rates at 25%. John Corias, Senior Partner of m.a.s accountants, the accounting office for small business in Melbourne and Sydney, is well pleased with the decision to lower the tax rate once more as inevitably, it increases cash flow.
“Increasing cash flow creates very simple but very obvious effects: more money, which means more capacity for staff and equipment, which mean more jobs” says Corias.
Corias also sees the decision to increase the cap for businesses in the instant asset write off as “not just a welcome sign for further growth, but a vote of confidence to the backbone of the country too”.
Considering food manufacturers make up 26%o of the total manufacturing industry in Australia, any and all opportunities for growth in the industry will have a hugely positive impact. Queensland will benefit substantially – it’s already outperforming other states economies and is forecasted to grow more than 60% by 2031. It grows one third of the country’s produce and is the nation’s primary beef producer – efficient and effective manufacturing and the economic reforms that support it are important to the state.
The 2016 election will bring more discussion and focus on jobs and growth in the country, and FoodTech Qld will be keeping a close eye on the impacts for the food manufacturing and processing industry.