The Federal Government’s instant asset write-off scheme is allowing bulk businesses to make massive investments into their capital infrastructure. ABHR learns more about how the scheme is also encouraging new automation.
At the release of the 2020 Federal Budget in October, the Federal Government accounted a new scheme that would make investing into new equipment much more appealing to businesses.
Businesses with a turnover of up to $5 billion, around 99 per cent of Australian businesses, could immediately deduct the full cost of eligible depreciable assets and first used or installed by 30 June 2022.
The move aimed to unlock investment, expand the productive capacity of the nation and create tens of thousands of jobs. Treasurer Josh Frydenberg at the time said small businesses will buy, sell, deliver, install, and service these purchases.
“This will provide a targeted cash flow boost that businesses across the country desperately need,” he said. “Normally, businesses would have to return to profit before they can use their losses, however, these are not normal times.”
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The scheme has been updated and remains on going, scaled back slightly to affect businesses with an aggregated turnover of less than $500 million.
Several bulk handling equipment businesses have been quick to take advantage of the scheme.
Braden Goddin, Sales and Marketing Manager for Aurora Process Solutions says many of its customers have been able to invest in automation, thanks to the funding.
“The schemes have been set up to get businesses up and running – to encourage growth. Say, for example, you’re a grain or seed processor and struggling to find seasonal labour due to COVID-19 workplace restrictions.
“As the owner of a small to medium sized business, you may not have the time to apply for grants or your cash flow faces competing requirements. Investing into capital equipment can be a bit like putting the cart before the horse if you are focusing on the week-to-week operations.
“Grants like this offer the potential to upgrade with less risk and get past that barrier for investing – and it can be as easy as asking your accountant if you’re eligible.”
Aurora Process Solutions provides semi- and fully- automated machinery for packaging, conveying, conditioning and palletising of commodities. Based in New Zealand with operations in Newcastle, New South Wales, and distribution centres in Melbourne and Sydney, the company provides on-site consultation, project management, installation and servicing across the Oceanic region.
The company focuses on the grain, seed, flour, cement, fertiliser and stockfeed industries, which Goddin says are facing a labour crisis.
“Viability of manual labour jobs in these industries is under significant pressure from a variety of directions, including changing societal norms and automation – a phenomenon that has repeated itself since the industrial revolution,” he says.
“The workforce is ageing, and recent graduates are much less likely to go for local manual labour positions, instead they’re looking to upskill themselves through university and other higher education.
“A lot of these jobs are also not well-suited for humans to be doing. They can be risky, repetitive and relatively low-skilled.”
In the research paper Mechanical Boon: will automation Advance Australia?, The Australian Department of Industry, Innovation and Science estimates that 44 per cent of Australian jobs are highly susceptible to automation.
Robots excel in jobs that are usually dull, dirty or dangerous, and can improve safety by removing humans from the equation. One of the benefits of automation is that robots don’t get tired, bored, or distracted, meaning there is less rework required and often significant safety benefits.
The researchers also found new opportunities and jobs begin to flourish as industries moved to automate processes, freeing up resources to employ workers in high value, high skilled and high paid roles.
Goddin says COVID-19 restrictions revealed how important the role of automation was for risk mitigation
“Many businesses have seen the economic shock that COVID-19 had. Now we know the market can be turned upside down at a moment’s notice, and it will most likely happen again. Whether it’s geopolitical tensions, a pandemic or the climate, economic shocks can happen at any time and they don’t discriminate,” he says.
“The biggest thing we saw our customers having to deal with was managing their manual labour workforce. Simply getting labour into a factory safely required significant time and expenditure. To make matters worse, it was also during a time of peak demand, but manufacturers often simply could not meet it.”
With the new instant asset write-off scheme in effect, Goddin says small- and medium-sized businesses have even less barriers to modernising their processes and gain a competitive edge.
“The scheme allows businesses to leap years ahead in their capital investment plans without endangering their cash flow positions or exposing themselves to unwise risk,” he says.”
“It’s a valuable opportunity to grow your business and prepare for the future.”