How the 2023 Federal Budget benefits small businesses but missed the mark on payment education
Written by Luke Fossett, GM of GoCardless ANZ.
The 2023 Federal Budget brings significant enhancements to financial infrastructure and support for small businesses. One of the key commitments from the government is an investment of AUD$88.8m over two years to support the Consumer Data Right (CDR) across banking, energy, and non-bank lending sectors. This investment aims to make the CDR initiative more accessible and valuable for participants, leading to streamlined processes and the accreditation of more providers.
As CDR gives consumers the ability to share their data with other service providers and promotes transparency and accountability in the way that businesses interact with personal data, more Australian consumers are now being given the opportunity to take control of their data and hold accountable companies that are misusing customer data.
However, one aspect that remains unaddressed in both this year’s and last year’s budgets is the rollout of PayTo, the Account-to-Account (A2A) payments infrastructure set to replace Direct Debit. The big banks’ revised integration target for PayTo was April 2023, but not all banks have met this deadline.
Taking into account the numerous delays in the rollout and the critical nature of this technology for the future of payments in Australia, investments in public education on the future of payments would have been a valuable addition to the budget. This is especially true considering recent data from GoCardless indicates that only 5 per cent of businesses, and 23 per cent of consumers are aware of PayTo.
The cost of living pinch is hurting households, and inflation is beginning to curb discretionary spending at local businesses. Under these circumstances, both consumers and retailers would benefit significantly from greater information about how our nation’s approach to Open Banking is changing, as well as shifts in payments infrastructure broadly. This would lead to more transparent, convenient and reliable payments within Australia and greater security for both individuals and companies during transactions. It would also help small Australian businesses by providing access to financial services and data that they may not have had access to previously. We would love to see some budget allocated towards advertising and education around these topics at a minimum and, at best, tax relief or cash incentives for businesses that adopt PayTo via their payments platform providers.
Despite this oversight, there is plenty for Aussie enterprises to be happy about. The cashflow relief offered to 2.1 million eligible small businesses is a much-needed and timely support measure. It will likely be well-received across all sectors, along with the $3 billion in direct energy bill relief to households and small businesses. Additionally, the new Small Business Energy Incentive aims to provide businesses with the cash flow they need to modernise their operations and achieve long-term savings.
The 2023 Federal Budget demonstrates a commitment to supporting small businesses through investments in financial infrastructure and financial help, something that has been less of a priority in previous years. While there is room for improvement in addressing the PayTo rollout, the considered improvements to CDR and the overall support measures are likely to have a positive impact on small businesses across Australia.
