Overall, the trucking industry has welcomed the measures laid out in the federal budget this week. The core of the trucking industry is the small to medium fleets, who do much of the heavy lifting in road transport. This is the business size singled out by Joe Haughey for some extra help as part of the plan to get the economy moving.
Company tax rates being cut for businesses with a turnover of less than $2 million will be welcome news for many small operators who may be struggling. It is estimated 45,000 of the 49,000 trucking businesses in Australia will come under this threshold and be able to benefit from the reduction of the rate from 30 per cent to 28.5 per cent.
The allowance to be able to immediately set the cost of any asset purchase under $20,000 against tax will also help to ease the strain. Although, this limit means the purchase of a new truck or trailer is not going bring any immediate tax deduction with it. There is also some capital gains tax relief for businesses changing their legal structures.
Elsewhere in the budget the commitment to allocating funds for any future Victorian government to build the East West Link and a further $100 million to improve the Northern Australia Beef Roads, are both welcome and indicative of some positive pressure to stimulate economic growth.
The question for the trucking industry is whether the modest measures announced are enough to enable trucking to kick on and grow, not continue with the current situation with patchy growth and some sectors growing while others remain static.
There is a high level of turnover in trucking businesses, compared to their profit margins, mainly due to inputs like fuel. This kind of cash flow means the Treasurer has been advised by NatRoad to raise the turnover limit to $5 million to encompass many more of the smaller firms with relatively high turnover who are looking for a stimulus.
What the trucking industry needs is also what Australia as a whole needs. This is a more dynamic stimulus, something which will kick start economic activity and get the juices flowing throughout industry.
The Central Bank has tried to reduce interest rates to a point where they free up funds for investment and stimulate growth. However, those holding the purse strings remain cautious and new investment is slow to get going.
Many economic observers have looked at this situation and are of the opinion the parameters have changed since the GFC. It is no longer possible to accelerate and decelerate the economy using interest rate changes and small targeted stimulation through funding.
There is a growing opinion, the need is for a big funding commitment similar to those used in the thirties to bring the world out of the Great Depression. Major public investment in big infrastructure projects would get industry going and the benefit would spread through the rest of the economy. The dangers of inflation are minimal and the results would be overwhelmingly positive.
Where do the funds come from? The government has the capacity to borrow, and at rates much better than commercially available. Also there is a superannuation sector with plenty of cash available looking for a relaxation of the regulations to let them invest in the kind of infrastructure we need, projects which stimulate growth and increase productivity.
Yet again we appear to be in a situation where politics is getting in the way of what we need to do as a country, and as an industry. It’s about time there was less worrying how it will play in the media and more doing the right thing for the economy. Let’s get going.