The annual pre-budget survey of our client base by KPMG Enterprise this year takes place just six months after the previous Budget, held last October. Yet even in this shorter timeframe, the picture has changed significantly.
Our survey of 100 leaders in Australian businesses – ranging from listed companies just outside the ASX200, to private companies, family businesses, and some public sector organisations – shows that the mid-tier sector, the backbone of the national economy, is feeling upbeat and a lot less fearful about the ending of JobKeeper than it was in our previous survey, just ahead of the October 2020 Budget.
Summary of key findings
1. Impact of COVID-19
- Two-thirds of businesses either used government support mechanisms through COVID-19 and were now ‘emerging with confidence’, or said that new opportunities had emerged as a direct result of the past year’s experience.
- Less than half said that COVID-19 or other factors had negatively impacted the business.
2. Response to Government stimulus
- Only one-third now expected the recent ending of the JobKeeper scheme to lead to a significant decline in economic activity and higher unemployment. This compared to two-thirds in our previous survey just ahead of the October Budget.
- The biggest challenge seen by businesses was once again cost and margin pressures, followed by supply chain problems and recruiting skilled staff.
- When asked about paying back COVID-19-related debts, respondents favoured moves to raise productivity as the best way to do so and major tax reform will be a key part of this. But if any single tax has to rise, GST was the clear favourite.
3. Taxation System
- Fifty percent of respondents were concerned about ATO programs directed at the top 500 and ‘next 5000’ privately-owned groups, as part of the ATO’s wider ‘Justified Trust’ tax assurance program aimed at Australian businesses and wealthy family groups.
- Nearly half of respondents believe they are well prepared for the additional compliance activity – despite nearly two-thirds saying they do not currently have documented tax risk management frameworks.
4. Family Businesses
- Family Businesses account for a large proportion of the Australian economy and our tax rules provide no concessions for transferring ownership to achieve succession to the next generation. There was significant support for ownership succession to take place in family businesses without tax.
5. Incentives and Innovation
- There were encouraging signs for future growth and innovation, as significant numbers have taken advantage of the Instant Asset Write Off and plan to do so with the R&D Tax Incentive.
- Eighty-five percent of respondents welcomed the government’s e-invoicing program as a boost to productivity and efficiency.
KPMG Customer Intelligence conducted a pulse check on behalf of KPMG Enterprise targeted at clients running mid-market firms in order to gauge sentiment regarding salient issues before the 2021/22 Federal Budget is announced. Australia’s mid-market is often referred to as the ‘engine room of the nation’s economy’, employing nearly a quarter of all Australians and responsible for almost 40 percent of Australia’s business revenue.
The survey was completed by 100 mid-market business directors and decision makers. Most respondents were from private companies, however there were also some from publicly listed companies, family businesses and NFP’s. Respondents also came from a range of industry sectors; however the majority were from manufacturing, banking and financial services, retail or health and human services. Results are a valuable indicator of Enterprise clients’ opinions concerning the current business and budget environment.