Industry groups push for extension to small business energy incentive
The small business energy incentive is in need of ‘critical changes’ in order to maximize take-up of the measure, the government has been told.
The government’s small business energy incentive designed to support electrification and more efficient use energy has been welcomed by the accounting bodies and the Energy Consumers Australia but there are calls to extend the timeline for the measure.
Energy Consumers Australia has urged the government to extend the program timeline to at least 30 June 2025.
CPA Australia has similarly called for an extension with businesses likely to struggle to have an eligible asset used or installed for use by 30 June 2024 given the shortage of appropriately qualified tradespeople.
“Many assets that would improve efficiency need to be manufactured and imported or custom-made offshore and there is a known shortage of appropriately qualified and licensed tradespeople. The same issues apply to improvements of existing assets,” the accounting body stated in its submission.
“This problem would be exacerbated if the law takes longer to pass Parliament than expected.”
Energy Consumers Australia said whilst the intent of the incentive is to encourage small businesses to install energy efficient products as soon as possible, small businesses require a longer timeframe for implementation.
“The installation of a new energy saving product will save money in the long term, however, a small business person has to consider the immediate impacts on their business, including financial impacts and disruption to business processes,” the small business and consumer group said.
“An announcement that runs for one year does not provide certainty for either the small business investing in the product or the small business installing the product. For example, at present an electrician can’t plan and invest in new staff, training and installation equipment to meet the demand of their clients if the program is limited.”
Access to advice and tailored information
Providing access to advice and support would also help maximise the uptake of the incentive by small business, said Energy Consumers Australia.
“Australia’s 2.2 million small businesses can be reached if information flows through the trusted pathways where small businesses typically get this advice such as industry associations, accountants, bookkeepers and advisors in the energy space,” the submission stated.
“Providing industry specific, tailored advice and information to small businesses will help them improve the energy performance of their operations and premises. In our submission to the National Energy Performance Strategy consultation paper, Energy Consumers Australia has previously recommended government agencies work with small business peak bodies to identify effective incentive and assistance measures.”
Greater clarification needed
Consistency around how ‘energy efficiency’ is determined would also help small businesses to make the right decisions, Energy Consumers Australia and CPA Australia said.
“Clarification is required on how energy efficiency is determined where a business acquires an asset that has been custom-made (engineered) for it,” the CPA Australia submission said.
“If such a custom-made asset is not replacing another asset, then an explanation on how its energy efficiency can be compared against a ‘new reasonably comparable asset’.”
Energy Consumers Australia agreed that any definition of energy efficiency should take into consideration the replacement of existing custom-made equipment to ‘reasonably comparable’ equipment or new innovations immediately purchased from overseas.
“Developing a rating scale for energy efficiency will likely take a long time to implement due to the diversity of industries and products and the complexity of the variety of equipment used in different industries.”
What is considered to be a ‘reasonable improvement’ in energy efficiency when switching to a new product compared to the previous product also needs to be clear to the small business owner, the submission said.
CPA Australia also said that further clarification was also required on how to compare energy efficiency between assets where there is no energy rating label available in terms of examples of other sources of measuring energy efficiency a taxpayer can reasonably rely on to satisfy this tax incentive.
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