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Biosecurity, soil and relocation: How the budget stacks up for FMCG

Federal treasurer Josh Frydenberg has handed down a national budget worth billions of dollars with a focus on boosting the country’s digital economy, reskilling Australians for the jobs of the future, and on providing more cash for Aussies to spend through tax breaks.

But, after a year of comparatively strong economic recovery, how do the new measures stack up for the FMCG industry?

A nation-wide digital upgrade

In all, the government is dropping $1.2 billion on accelerating Australia’s digital transformation through it’s Digital Economy Strategy. The funding eclipses the $800 million unveiled last year, with both retailers and consumers having amplified their reliance on e-commerce, and the internet more broadly, due to the ongoing impact of Covid-19.

“Every business in Australia is now a digital business,” said Prime Minister Scott Morrison.

“This transformation is not merely a national one that needs to happen – it’s a global one that is happening We must keep our foot on the digital accelerator to secure our economic recovery from Covid-19.”

The measures announced, including almost $30 million to fund the rollout of high speed 5G internet and over $100 million to support digital cadetships to help Australians build necessary digital skills, have largely been welcomed.

“The pandemic has created a powerful shift in the way people live and work and how people purchase the goods and services they need,” Australian Retailers Association chief executive Paul Zahra said.

“It’s important that businesses, particularly small businesses, have the skills and knowledge they need to keep up with the rapid rate of innovation and new and emerging consumer trends.

“Consumers are now expecting retailers to ‘meet them where they’re at’, through consistent, seamless omni-channel interactions – and that involves businesses having a clear and dedicated focus on digital.”

Skills training for the masses (retail excluded)

And, after a year or so of job support and job creation being of high importance to both the Australian populace and the federal government, it’s no surprise the budget came out with a $1 billion extension to the JobTrainer program – an extension which it expects to provide around 160,000 extra training places.

Though, while eligibility for the fund was expanded within the 2021 Budget, it still isn’t available to retailers: the second-largest employing sector in the Australian economy.

“Much credit must go to the resiliency and innovation of the retail industry [but] despite the headway, it remains an uncertain period for both the industry and the consumers who support it,” said Vend vice president of APAC Gordana Redzovski.

“Particularly concerning for retailers are labour shortages. Retail is a transient industry, underpinned by overseas students and short-term visa holders.

“With border closures in place for the foreseeable future, an extension of the JobTrainer scheme [would] have been celebrated by retailers nationwide.”

ARA’s Zahra added that, while the extension is certainly welcome, it is a huge missed opportunity to exclude the retail industry.

“For these measures to translate into job outcomes, we need more flexibility for retailers to access the scheme,” Zahra said.

“As Australia’s largest private sector employer – with 1 in 10 Australians working in the industry – retail plays an important role in the employment and skills rebound.”

Relocation, relocation, relocation

Frydenberg also announced a number of initiatives to help farmers recover from years and years of drought and flood.

Around $200 million has been set aside for a national soil strategy with the aim of raising soil standards across the country, with farmers willing to share the results of soil testing to see rebates through a two-year program.

And while there is zero new Federal funding to help bring overseas workers back to Australia, the budget has said it will seek to incentivise “modern agriculture job opportunities” to bring Australians into the industry.

To facilitate this, the government is making changes to the Take Up a Job program, wherein employees who have relocated for work will need to only work a minimum of 40 hours over two weeks to receive $2000 in relocation assistance.

And, in an effort to get young Australians leaving school on board with the program, the program has been opened up to 17-year-olds for the first time.

Boosting biosecurity

The security of Australia’s livestock and crops was also supported by the budget, with about $370 million set aside to protect crops and “put a protective ring around Australia”, according to Morrison.

According to the ABC, the efforts will include $30 million to improve the biosecurity of incoming international mail, $100 million to identify freight containers for intervention, and $35 million in research on how pests enter Australia.

“Protecting our borders is as much about protecting our livestock, crops and environment from diseases that have the potential to devastate them and the livelihoods they support,” Morrison said.

“This investment is about putting a protective ring around Australia to safeguard industry as well as the rural and regional communities that depend on it.

“There will never be zero risk, but we are committed to reducing the risk where possible.”

Tax cuts to drive spending

One of the main ways the government seems intent on boosting spending is through providing tax cuts to more than 10 million low and middle income earners – with an expected $7.8 billion to enter the economy through tax relief worth up to $1080 per person.

“Lower taxes means that hard-working Australians will keep more of what they earn, allowing them to spend more, help grow the economy and create more jobs,” the Government said.

And this, paired with the $1.7 billion towards childcare subsidies, is likely to further boost retail spend as Australians see their discretionary income rise.

“With family households, and particularly women, expected to hold more disposable income this financial year, this should trickle down into increased consumer spending,” said Emarsys’ APAC managing director Adam Ioakim.

“[It will] no doubt help further boost retail spend and accelerate industry growth following disruption in 2020 driven by the pandemic.”

But businesses didn’t miss out on tax relief. The Government also announced an extension of last year’s instant asset write-off scheme, which allows businesses to claim the full value of eligible assets that are installed before June 2023 – a 12 month extension.

Zahra welcomed the scheme, stating it allows businesses to invest in what they need, when they need it, so they can continue to focus on growing in the “post Covid world”.

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