I rise to speak on this bill, the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, in particular schedule 2. Schedule 2 relates to the government’s small-business energy incentive, which is a bonus tax deduction equal to 20 per cent of the cost of an energy efficiency or electrification improvement. The incentive is designed to help small and medium businesses electrify and save on their energy bills. This temporary measure applies from July 2023 to June 2024. It aims to help small businesses make investments, like electrifying heating systems, pumps or motors; upgrading to more efficient fridges or air-conditioners; installing heat pumps and batteries; and devices to shift electricity consumption to off-peak hours.
There are 3.8 million businesses across Australia, with an annual turnover of less than $50 million, that are eligible for this tax deduction. In my electorate of Indi, almost 15,700 businesses will be eligible, and I’m excited for them. I strongly welcome this schedule within the bill, as for years now I’ve been calling for wideranging assistance to help businesses and households improve their energy efficiency and electrify. Energy efficiency and electrification are our best options for reducing our energy bills and reducing emissions.
As an Independent MP, I’m committed to smart action on climate change, not just because it’s good and needed for our planet but because we know that renewables and electrification mean people save money. In my communities, people are really struggling. For small-business owners, the rising cost of living hurts twice—in household bills and in the bills and costs of running a business. They want to keep their prices down and they want to be more efficient and innovative, and I back them in on that 100 per cent. This measure will help small-business owners, many of whom are mums and dads who work hard and employ others in our communities, to save money.
Reducing the costs of a battery and more efficient equipment could be transformational for businesses like the IGA in Euroa. Last year, I spoke with Tim Burton, who’s taken over the business from his dad. With costs rising all the time, keeping power prices down is one of the biggest issues for Tim. Tim told me that, due to the poor power network in Euroa, their supermarket has blackouts at least once a month. They’ve put so much solar on the roof that they’ve run out of space, and they’ve had to add a backup diesel generator to deal with blackouts and brownouts. Assistance to purchase a battery could help Burton’s IGA use their solar to run fridges at night and during blackouts, while more efficient fridges would help reduce bills and the reliance on the weak local grid, or indeed on their diesel generator.
Right across Indi, businesses like Tim’s are telling me that rising electricity bills are making running a small business increasingly challenging. There’s a clear hunger for incentives to help businesses reduce their energy bills. This hunger was validated by the flood of applications for the recent energy efficiency grants for small and medium enterprises. Across my electorate of Indi, 24 local businesses will share in $554,906 as part of the energy efficiency grants for small and medium sized enterprises program. These businesses will use the money to replace or upgrade existing equipment to improve energy efficiency and reduce costs. Financial support, such as the recent energy efficiency grants and the small business energy incentive in this bill, empowers small businesses to manage their energy use and to reduce their overall power bills.
Many businesses across my electorate have solar, such as Burton’s IGA in Euroa, and I hope this bill will assist these businesses to install technologies that will help them make the most of that solar by shifting more of their electricity use to the middle of the day or by installing a battery to store electricity from their solar for use throughout the day and night. For the many wineries, dairies, orchards, food processors and hospital venues across Indi, fridges, chillers, water heaters, pumps and other motors are the biggest users of energy, and there are major opportunities for energy efficiency improvements across all of these energy users. For example, Dal Zotto winery, in the King Valley, will be using the grant funding received by the energy efficiency grants for small and medium sized enterprises program to insulate tanks and piping, reducing the energy used to run fridges and chillers and allowing more solar to go back into the grid.
Now, while this incentive in this bill is exciting for small businesses across Indi and indeed across Australia, it’s really disappointing that this measure is temporary and will only apply for one financial year. With just over seven months remaining until 30 June 2024, the deadline for equipment to be installed and ready for use—this is just too short if a business is to receive this tax offset. Given constrictions in supply chains and access to skilled labour in our regions and the uncertainty to date over whether this tax offset would actually be legislated, many small businesses won’t be able to access this support or will deem it too risky to initiate a project without certainty that they’ll be able to receive the tax offset. This should be a long-term measure that allows small businesses to make investment decisions they can plan for over much longer time horizons. Anyone who’s ever run a small business would know this, and they would know that big investment decisions, like those incentivised in this bill, aren’t rash and aren’t last-minute calls; they form part of years of business planning. So making a measure like this temporary and applicable for such a short amount of time honestly feels half-hearted.
Beyond making this a long-term measure, we know the government must do much more to support households and businesses reduce emissions, reduce bills and increase efficiency. The Grattan Institute, the Climate Council the Climateworks Centre, Rewiring Australia, the International Energy Agency and almost all other expert bodies are unanimous: households and small businesses must increasingly electrify if we’re to have any hope of getting to net zero carbon emissions by 2050. This might seem like an impossible task, but it’s not. It’s a big task, it’s a difficult task, but we do have the solutions in front of us. This requires electric cooktops, electric heat pump heaters, water heaters and electric vehicles, as well as batteries in our homes and businesses to store the electricity these appliances need to run. This must happen in houses, apartments and businesses. It must happen for landlords and the one-third of households who rent, for businesses that own their premises and for those that lease. It must happen in the cities and it must happen in the regions. And it must enable low-income people and small family businesses to share in the benefits of this transition.
There are multiple benefits to homes and businesses in electrification. Firstly, importantly, in this cost-of-living crisis that we face, energy efficiency and electrification reduce bills. Analysis by energy entrepreneur Dr Saul Griffith shows that a fully electrified household would save $5,000 a year in petrol costs and power bills. Businesses are set to save even more. Electrification is also healthier: we know that using gas releases pollutants that cause asthma and other problems, but with high upfront costs, we can’t expect individuals and businesses to electrify on their own. The government can and must do more to support households and businesses to do this, and that’s why I support this bill and will continue pushing for additional measures and for the government to do better for small business.
People across my electorate of Indi are aware of the benefits of electrification and energy efficiency. With the interests of my constituents—and of people and businesses across Australia—always front of mind, I have consistently called on the government to do more to unlock the opportunities of electrification and energy efficiency, and I’ve proposed legislation and engaged constructively with governments of the day—before and now—to do so. I introduced my private member’s bill, the Renewable Energy (Electricity) Amendment (Cheaper Home Batteries) Bill in 2022 and again this year. My bill aims to lower power bills for Australian households and small businesses, reduce emissions, and improve energy security by adding small-scale batteries as eligible technology to create certificates under the Small-scale Renewable Energy Scheme. The SRES was originally developed for rooftop solar so that when you buy solar you earn certificates to on-sell to electricity retailers, who are required to purchase them. This drives down the cost of installing solar and creates a financial incentive for individuals and businesses to purchase renewable energy. The SRES has now also expanded to small-scale wind and hydro systems, solar water heaters, and air-source heat pumps. However, perplexingly and astonishingly, it continues to leave out batteries, and this needs to change.
Current market and government expectations and aspirations are that the renewable energy share of our national electricity grid will reach 82 per cent by 2030. Increased storage capacity on the grid via batteries is critical to enabling this high penetration of renewables into Australia’s electricity mix and to maximising the benefits of electrification. However, a lack of financial incentives for small-scale batteries has resulted in a significant gap in the current residential and small-business electrification landscape. Around three million Australian homes have solar panels; however, only 180,000 have a battery. According to green energy markets, the 82 per cent target assumes that the cost of small-scale batteries will be subsidised this decade, so I say to the government: get on with this. If small-scale batteries are included in the SRES, the price of a battery is reduced by about $3,000, depending on the size of the battery. This would incentivise many Australian homes to take up batteries and reach the 82 per cent target. I welcome the government’s proposition in this bill to include batteries as eligible technologies for a 20 per cent bonus tax deduction for small and medium businesses. A 20 per cent bonus tax deduction on the cost of a small-scale battery would reduce a business’s taxable income by around $3,000. For many businesses, such deductions could tip the balance in favour of investing in batteries and other technologies. I’m optimistic about what improvements this new tax incentive can unlock and how it can set up local businesses across Indi to cut costs, cut emissions and thrive, but I want to see the government extend it.
This incentive is a step in the right direction, but it is by no means enough to address the energy bill pressures that businesses and households are facing, and it is by no means enough to enable Australia to meet its emissions reduction targets. We need much more than temporary measures; we need permanent incentives to help businesses and households electrify and improve their energy efficiency, including households and businesses that don’t own their own homes or premises. With these incentives we need to include all technologies that can reduce emissions, including electric vehicles, and we need to ensure—we absolutely must ensure—that low-income households are not forgotten.