2023 Victoria Budget – ‘Doing What Matters’, and what matters for small businesses

2023 Victoria budget

The 2023 Victoria budget focuses on debt recovery and economic development. The main theme to emerge is the burden of debt, highlighted by a ten-year ‘Debt Levy’. This will primarily affect big businesses, with higher payroll tax bills aimed at decreasing debt.

Although this may come as stark news to big business owners, small businesses need not worry. The budget introduces new grant and support programs to benefit Small Businesses, and to help grow the economy. Starting off with the Made in Victoria – Industry R&D Infrastructure Fund. This $120 million fund was established to incentivise and leverage private industry investment in research and development and complement existing incentive settings such as the Commonwealth’s R&D tax incentive.

The fund will also help accelerate projects in new energy, health technology,  food manufacturing, defence and aerospace, and advanced technology – key sectors identified in the Government’s Made in Victoria: 2030 Manufacturing Statement. The Industry R&D Infrastructure Fund recently opened for EOIs in Early July, closing in Mid-August.

Funding in the 2023 Victoria budget was also allocated to establish a ‘Manufacturing  and Industry Sovereignty Fund’, to support the development, expansion and retention of strategic sovereign manufacturing capability within Victoria. This is good news for those businesses centered around manufacturing and R&D, as these programs will act to boost the Victorian economy and create world leaders in advanced manufacturing right here in our domestic markets.

Another big win in the 2023 Victoria budget for small businesses was the increase in the payroll tax-free threshold. This will make it easier for small businesses to succeed, with the threshold being lifted from $700,000 up to $900,000. According to the Victorian Government, this will result in 4,200 businesses being exempt from the tax.  Another 22,000 businesses will pay a reduced amount of tax, saving up to $9,700 every year.

It’s further good news with the threshold being lifted again from 1 July 2025, increasing from $900,000 up to $1 million, meaning another 1,500 or so businesses will become exempt. This will boost the ability of small businesses to compete, as this tax-free threshold will be phased out for larger businesses over the coming years.

An incentive that the government is boasting in the 2023 Victoria budget, in a first for any state in Australia, is the abolishment of business insurance duty. This will be dissolved over a ten-year period, with the Victorian Government estimating eligible businesses are likely to save around $3,200 on professional indemnity insurance, or $2,400 on fire and other special risk insurance, cumulatively over the ten-year period. Other than small business owners, apprentices and new parents are also winners to arise out of the budget.

  • For apprentices, the Government has announced a $10 million allocation to deliver free car rego to trade apprentices, saving up to $865 every year. A further $1.5 million was funded to implement the ‘Apprenticeships Taskforce’. This taskforce will act to advise the Victorian
    Government on recommendations for workplace safety, as well as identifying opportunities that apprentices and trainees can take part in, to ensure a successful start to their career.
  • New parents and children’s education are also a focal point of this budget, with multiple major programs being announced to provide relief and support to those who need it most, from neonatal care, all the way to kinder. A major $1.6 billion was allocated to roll out the ‘Three-Year-Old Kinder’ program and to help increase capacity by building new kinder facilities. While a further $1.4 billion was set aside for ‘Free Kinder’, to give Victorian parents the choice to return to work, and to provide savings of up to $2,500 to families each year.
  • Another $1.3 billion was also announced to build around 100 new kindergartens, with the majority to be located nearby government schools. Additionally, $86 million allocation was provided to support parents with their newborn babies, including greater access to free Maternal
    and Child Health services, as well as support for fathers’ groups and multicultural communities.
  • On the other hand, those not so lucky to emerge from the budget unscathed included big businesses and property investors. Big businesses with national payrolls of more than $10 million a year, will see the payment of an additional payroll tax. This tax altogether will raise an expected $3.9 billion for the Victorian economy over 4 years. And much like big businesses, disappointment will arise from those with investments in property. Investors will expect to pay an average of $1,300 more in land taxes, each year. This will further bring a predicted $4.7 billion injection into the Victorian economy over the forward estimates.

With this latest 2023 Victoria budget, the Labor Government aims to tackle the debt recovery, and with it, emerge winners and losers. Small businesses, apprentices, and new parents were able to climb out on top, with new programs and incentives to provide additional support. Whereas big businesses, property investors, and the like weren’t so lucky, being hit with increased taxes. This will spark disappointment amongst those affected but will evidently see a positive impact on the Victorian economy, with an expected budget surplus of $1.2 billion by 2026-27.