The 2015 Federal Budget – more positive than last year’s, with handy tax breaks for smaller firms, but very little long term benefits especially when looking ahead to a more sustainable, well-designed future.
These are the sentiments expressed by Australian architecture practices after the budget was announced earlier this month, with less than a third of the architects surveyed believing that this year’s budget would have a positive effect on their business or the wider profession.
The results, drawn from the Association of Consulting Architects Australia’s (ACA) One Minute Federal Budget Impact Survey, signalled a more negative stance by larger practices who are not eligible for the small business tax break, although smaller firms that would benefit from the tax cuts also questioned the lack of investment into renewable energy policies.
“We are a small business, hence will benefit from the reduced company tax rate and opportunity to write off equipment purchases. On the downside, continuing lack of leadership on the environment, housing and transport will continue to erode the profession's reputation and ability to make positive contributions,” said one respondent.
“The tax write-off may allow us to upgrade some equipment, but the lack of climate change mitigation and adaptation funding will make our job harder,” said another.
Concerns were also raised about the lack of government and commercial investment:
“Small business tax cuts good. Reduction in spending on Infrastructure, education and health not good for the building industry.”
“The majority of our project commissions are related to state government funded projects, so unless the state government confidence and levels of investment in infrastructure occur I expect that we will continue to struggle to remain in business and profitable.”
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Ultimately, 39 per cent of respondents believed that the budget would have a mixed impact, with most noting that while small businesses are winners, the budget will not adequately stimulate the economy and industry, nor address Australia’s future:
“Short-term small business advantages, long term education disadvantages for the profession.”
“Developers will be reluctant to proceed with projects, architectural practices will continue to reduce in size or go out of business altogether.”
“The real problem is the government is firmly focused on the past and not the future. Policy that understands this would enable businesses to prepare now for the inevitable low carbon future we will embrace.”
How architects plan to navigate economic changes
The ACA survey also included a question about whether and how architecture firms engage in business planning to help them navigate the shifting economic circumstances. According to the ACA, respondents said they would be cautious about spending but would take advantage of the tax breaks, while others noted they were trying to diversify because of sectoral fluctuations.
“Stay small and agile and NOT spend $20,000 just because a carrot has been dangled, and NOT employ someone unless there is an increase in education projects come into the office.”
“Yes. but hard to control workflow when fluctuations in the economy occur. We anticipate a stronger growth of the economy as a result of the recent budget and are looking to be adequately resourced for an upturn in our workload.”
“Would time purchases of any needed new equipment to take advantage of bringing forward the depreciation.”
“Take advantage of accelerated deductions to move forward some equipment expense by at least one to two years.”
“Cross-subsidise practice with teaching and ongoing study to train in other fields in order to balance out economic cycles in construction.”
“Tighten expenditure budget. Improve efficiencies in project and resource planning.”
The majority of survey respondents were directors, partners or owners of an architectural practice, with most coming from smaller practices, and involved in the residential, education and commercial sectors. For the full findings, please visit aca.org.au.