Rudd Stimulus Package lets down struggling small businesses

Preamble

The year is 2009, the world economy is seriously in the brown stuff, primarily due to a lack of regulatory oversight of US financial institutions.  The Australian Labor (supposedly socialist) government under Kevin Rudd creates an Econonic Stimulus Package to promote economic growth in these difficult times and reduce the effects of recession.

Let's give out lots of money!

Part of the Economic Stimulus Package involves cash hand-outs to those earning under $100k AUD per annum.  The amount of these hand-outs is determined by income, with a maximum of $900 AUD per person.

Who can object to free money?  If someone were to give me a legal, tax-free 900 dollars I should be delighted – if it were not for the fact that this money actually has to come from somewhere.  Putting the nation in to debt to give people freebies doesn't strike me as being sound economic practice but heck, I'm a software developer, what would I know?  Nor could I really object if someone actually gave me some "free money".

The hidden conditions

I – and many others – have only just discovered the hidden conditions behind the cash hand-out.  Whilst this has been much touted in the media for some time, these conditions have been quietly ignored.

Let me divulge my own business situation: as those who know me are already aware, I have had chronic health issues for the last few years that have seriously impacted my ability to work, and thus my income.  Due to my short hours, in the last tax year, my nett profit was such that I did not pay any income tax.  (I did, however, collect GST and had to donate my own time for free to the Australian Tax Office to report this.)

It was only when I received a newsletter from my accountants, which had an article on the Stimulus Package, that I discovered that the hand-outs were only going to those who had actually paid income tax or Medicare Levy in the past financial year.  Did I hear this from the government press-releases?  Was this ever mentioned in the media coverage?  No.  It took until the time when the supposed hand-outs were to be given out that I found that I wasn't going to get anything.

It is not the fact that I am not going to get free money (and thus run the country into debt) that annoys me – it is the fact that this fairly significant condition was never openly disclosed.

It gets worse

That I am not entitled to the benefits because I have not been able to work enough are neither here nor there.  What is far worse is that small businesses that are trading normally but, for whatever reason, have not made a profit are also missing out.  I know of a person who runs a specialist retail business (food industry) who made a good turnover but, due to current conditions, did not make sufficient profit to be paying income tax.  The result: no hand-out.

To me, if anyone actually needs the "free money" then it is small businesses that are struggling. The retailer I mentioned already had plans for the stimulus money before she found out that it wasn't happening.

Small businesses are the life-blood of any nation; to ignore those that need help whilst giving help to those who don't really need it is ill-considered, to put it mildly.

I will pre-empt the cynics who may regard this as commercial natural selection: whilst some small businesses will always be doomed to failure, many current hardships are due not to poor business planning/market research but to external pressures over which business owners have no control.  In the same way in which public healthcare protects and nurtures the population (or at least it should,) "economic healthcare" should be protecting and nurturing businesses, especially those that are most frail and need this healthcare the most.

Conclusion

Whilst there are still benefits that can be enjoyed by those missing out on the benefits described (tax incentives on new capital purchases – if they can be afforded,)  I feel that the whole hand-out scheme is ill-conceived.  Not only does it not reach some of those who really need it, but it is putting the nation – including the recipients – into debt that they certainly do not need.

By the way, if you are a small business owner who is struggling and, by reading this, have just found out why that cheque hasn't turned up, please don't blame me; I may be the Harbinger of Bad Tidings but am not about to fall on my sword as I have already been wounded enough by the government's deception (intentional or otherwise) in this sad affair.

 

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