Retailers needed more support from the budget

A retail recovery will help push an economic recovery. Picture: Getty Images

It’s hard to recall a budget which fell amid such global uncertainty – world conflict, intense supply chain pressures, chronic labour and skills shortages, rising inflation and unprecedented local flooding. These events come amid a pandemic now into its third year.

With a federal election to be held within weeks, this budget plays a significant role in determining business and consumer confidence levels – which further affect our economic fortunes.

There is much to be optimistic about. Alongside some robust economic indicators, including Australia’s low unemployment rate and retail’s strong top-line performance, the budget delivered many short-term positives for business – small business in particular.

Retailers welcome the cost-of-living measures, including a $420 tax offset for low and middle-income earners, a temporary cut to the fuel excise and $250 payments to pensioners. The fuel excise relief will save households $5.6bn and the low and middle-income tax offset will put $4.1bn into 10 million taxpayers’ hands. This will provide immediate assistance to many Australians, with the payments set to flow through the retail economy.

The investment in small business innovation provides $1.6bn in tax relief to support small and medium-sized businesses to go digital and upskill their employees. The pandemic fuelled a huge acceleration in digital trends that have permanently changed the way retailers do business and where and how people shop. This will ensure small businesses are not left behind and that they are supported to keep up with the rapid rate of innovation.

The government has committed $2.8bn to support Australian apprenticeships and traineeships, but we need to ensure this is spread across the economy, and not just geared towards male-dominated construction trades. Retail is Australia’s largest private sector employer, and with the sector undergoing profound labour shortages and a skills deficit, it is important the training measures apply to our businesses, both large and small. There are 36,000 job vacancies in the retail industry, while the hairdressing industry is also desperate to find qualified and skilled staff. Hairdressing has been on the skills shortage list for apprentices for 20 years.

While the budget provides much needed relief in the short term, strategic challenges remain which must be urgently addressed if we are to retain our social and economic resilience.

We cannot have an economic recovery without a retail recovery.

While retail overall is performing well, the business recovery remains elusive for some, including CBD retailers, travel retail, hair and beauty, hospitality and many small businesses who require a level of ongoing targeted support. While the vast bulk of Covid-19 restrictions have been removed, we are yet to see much of an improvement in terms of CBD foot traffic, including the return of city office workers. Some ongoing targeted support will be required to prevent these businesses from becoming an insolvency risk.

Deep questions also remain around our longer-term social and economic resilience. The next big global disrupter on our doorstep is climate change, and it’s playing out before our eyes with the recent floods in NSW and Queensland.

We have seen the business community take positive steps towards net-zero emissions, but this also needs to be supported by greater government action.

While we recognise the merits of the government’s recycling modernisation fund, how we as a nation address climate change and sustainability challenges is insufficiently addressed. In fact, analysis shows the spending around climate change and sustainability measures has gone backwards in this budget.

We need to see many more measures to address business adaptation and resilience to the impacts we are already experiencing around natural disasters, such as flooding and bushfires as well as educational measures for business on sustainability adoption.

The budget certainly provides some short-term gains, but questions remain over small business resilience in the long-term in the face of so much global economic uncertainty.

Paul Zahra is chief executive of the Australian Retailers Association.