‘It looks like a vote buyer to me’: SME firms react to budget 2022

31 March 2022 By Lauren Croft
Budget 2022

After the 2022-23 federal budget was announced this week, numerous SME and boutique law firms have weighed in on what the budget means for their business. 

On Tuesday (29 March), Treasurer Josh Frydenberg handed down the 2022-23 budget ahead of the upcoming federal election.

For SME law firms, there were numerous tax-relief measures announced “to support investment and create jobs”. Small and family businesses, Treasurer Frydenberg said, “are at the heart of our economy and local communities”.

To that end, the Treasurer promised the following in his speech:

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“For every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction”; and 

“Every hundred dollars these small businesses spend on digital technologies like cloud computing, e-invoicing, cyber security and web design will see them get a $120 tax deduction”.

Following the announcement, Lawyers Weekly spoke to a number of boutique and SME firms about the implications of the federal budget on their businesses.

Principal at Danny King Legal Danny King told Lawyers Weekly that she is particularly excited about the incentives for smaller firms to invest in increased training for staff and technology.

“While many small firms prefer to train staff in-house and see their DIY cultures as the bedrock of agility, tax breaks to outsource it instead have a two-sided benefit,” she said.

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“The first is the ability to lean on expert providers to gain new specialised skills and capabilities that will be crucial to meeting demand as the market shifts. The second is freeing up time to focus on revenue generation which can drive a virtuous reinvestment cycle.”

Similarly, principal and partner at Blackwattle Legal Trevor Withane said these incentives and the “scrapping of ASIC company search fees” were a “standout” for him.  

“The tax incentives for investment in tech and training in the budget provide excellent opportunities for boutique law firms like Blackwattle Legal. As a law firm that invests heavily in tech, especially cloud-based solutions for document management and legal research, this tax incentive drives us to invest further in finding even more advanced tech solutions to give our team the best tools available to do what we do and pass on cost savings to clients,” he said.

“Similarly, we’ve always invested heavily in the training of our lawyers, both externally and in-house, because, frankly, we want to attract referral work from the big law firms – the only way to achieve this is if our team is trained to the same high standard as their lawyers. 

“The scrapping of ASIC company search fees starting from September next year will be a huge boon, especially for boutique law firms. Although these costs can in some situations be passed onto our clients, boutique law firms focused on complex, document-heavy litigation like Blackwattle Legal would sometimes have to pitch for work, or undertake pre-engagement investigations at our own cost. The fact that we can get these searches for free will mean that our pitch and opportunity investigation costs are reduced.”

Managing partner at Travis Schultz & Partners Travis Schultz said that whilst the staff training development is a welcome incentive, the budget overall strikes him as a “classic elevator pitch” and “seems targeted at the broadest voter base”.

“Personally, I’m cynical about things like fuel excise cuts as they sound appealing to voters but I can’t see the petroleum companies letting them flow through to the consumer.

“But there are some positives in it for SMEs and law firms like ours. Our firm is one which invests very heavily in the ongoing professional development of the team – so a 120 per cent deduction for training costs will help us to continue to invest in developing the expertise of our staff. A reduction in the company tax rate will also help to some extent once a growing firm like ours reaches maturity,” he said.

“It’s pleasing to see that there will be funding for community legal centres where community members of limited means can access free legal advice – it will enable wider access to justice and that’s high on our list of priorities. But overall, it looks like a vote buyer to me.”

Law Squared chief operating officer Trent Milvain expressed a similar sentiment – and argued that the budget would only positively impact certain areas.

“We are into our third year of the global COVID-19 pandemic, there is an imminent election, and we are seeing an aggressive approach undertaken by Russia against Ukraine. Therefore, the vast majority of spending is aligned to such uncertainty that we are seeing, thus shorter-term measures, or rear-guard actions, that will create more jobs primarily in defence and infrastructure. This will have a positive impact on some specialised boutique law firms, but not many,” he said.

“However, there is some spending by the federal government in certain pockets, such as Skills and Training Boost and Technology Investment Boost. Law Squared will continue our investment in people and technology, therefore we are grateful for such schemes, yet it won’t have an enormous impact to the bottom line, or reinvestment into our business and therefore the economy.”

Additionally, the Treasurer announced a $4.6 million spend over two years to support the New Access for Small Business Owners program, delivered by Beyond Blue, to continue to provide free, accessible, and tailored mental health support to small-business owners – something which Ms King said she hopes will continue for years to come.

“The Beyond Blue support for SMEs is also fantastic and we would love to see that extended into subsequent years. We know from experience that starting and growing a firm isn’t easy and, alongside the known mental health issues in the profession, can take a heavy emotional toll on budding entrepreneurs at the helm of emerging boutiques.

“We see ongoing investment in digital solutions as vital to operational efficiency and a better client experience, but ‘levelling up’ can be an enormous expense for boutique firms. We plan to significantly lift our tech spend this year and beyond, and we’re now much more enthusiastic about that as a financial proposition than we were last week,” she added.

“Overall, this budget appears to be great for us. It will mean we can invest more confidently in new skills and capabilities and deliver on our efforts to implement best-in-class technology infrastructure.”

‘It looks like a vote buyer to me’: SME firms react to budget 2022
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