Last week, the NSW Government handed down its 2024 budget. And while we’re set to remain in deficit for the next four years, it’s not all doom and gloom for business.
Additional investment in infrastructure and housing, particularly in Western Sydney, brings opportunities for business to leverage the stimulated construction projects, while funding allocated to small business growth and workforce development will help build capacity, enabling businesses to upskill and respond to market demands.
And while there will be challenges – persistent inflation, decreased business confidence and economic uncertainty – it’s important for business owners and managers to remember to ride the financial ebbs and flows, remain focused on what you can control, mitigate apparent risks and harness the opportunities.
JPAbusiness budget analysis
We've identified some of the opportunities and challenges from the budget, as outlined below, and we've also done a deeper dive in our Budget Analysis document.
There are several opportunities and challenges for business owners from last week’s budget announcement:
Opportunities
- Infrastructure spending: the NSW Government is set to invest $2.1 billion into infrastructure projects statewide. In a win for western Sydney, spending is particularly high on projects like the Western Sydney Airport, providing investment confidence in the region.
- Housing funding: the budget has set aside $5.1 billion to build new homes. It’s good news for local builders and suppliers, who may be able to take advantage of these construction opportunities, in a residential market that has slowed due to interest rates.
- Building products and services: opportunities for businesses in this sector to leverage the investment in infrastructure and housing to support supply chain demand and production, while managing potential exposures to rising raw material costs.
- Small businesses: the budget has allocated extra funding to provide ongoing support services to small businesses, including resources to help secure government contracts, explore overseas markets and navigate regulations.
- Workforce development: $8.9 million has been added for fee-free training for all NSW apprentices and trainees. It’s an opportunity for businesses to upskill and train their workforce – without the training price tag.
Challenges
- Cost of debt: businesses will need to continue to carefully manage their working capital and cash flow in the face of continued persistent inflation and relatively high interest rates.
- Declined consumer spending: the cost-of-living crisis is still top-of-mind for many people. And while the budget provided some relief for families via energy bill rebates and increased affordable housing, most people are still being conservative in how they spend, which is likely to heavily impact businesses offering discretionary spend products/services.
- Economic uncertainty: the domestic cost-of-living pressure, coupled with global economic uncertainty from political tension in the Middle East and fluctuating commodity prices, is continuing to directly impact business confidence and investment.