By Colin Brinsden
(Australian Associated Press)
Small businesses intend to keep their side of the bargain by employing more staff in exchange for a suite of tax breaks from the Abbott government.
The government’s small business package that was central to the May budget came into full operation on Wednesday as the new financial year got under way.
The package was flagged as providing a boost to jobs growth.
“It will be delivered,” the head of the Council of Small Business of Australia Peter Strong told the National Press Club in Canberra.
Recent data showed businesses are already spending more since the budget as they take advantage of the $20,000 instant asset write-off.
People are starting to be confident, “now we’ll have to build on it”, Mr Strong said.
“Once you start being confident, that’s when you go off and look for a loan, take advice, that’s when you draw up a good business plan.”
One sector that doesn’t appear to need any more confidence building is residential construction with new figures showing building approvals rose by a further 2.4 per cent in May.
Approvals now stand at a staggering 17.6 per cent higher than a year ago.
Master Builders Australia chief economist Peter Jones said the May figures are in line with his forecast that dwelling commencements will reach record highs well above 200,000 in 2015 and 2016.
“Growth in residential building can be expected to continue for some time to come, putting downward pressure on house prices, which should allay fears of a housing bubble,” Mr Jones said.
However, housing is one of the few bright spots in manufacturing more generally.
The Australian Industry Group’s performance of manufacturing index tumbled 8.1 points in May to 44.2 – below 50 indicates the sector is in contraction.
The group’s CEO Innes Willox believes the closure of car makers is now having an impact, as are further declines in mining and other business investment in machinery and equipment.
“(These factors) and a still subdued economic outlook are weighing more heavily on the manufacturing sector than any positive effects of the federal budget and recent interest rate cuts,” Mr Willox said.