The Commonwealth Bank of Australia (CommBank) has reported a significant increase in small businesses’ investment in greener assets over the past year, despite economic uncertainty. According to CommBank’s data, business spending on electric vehicle (EV) fleets grew by over 325%, while spending on hybrid motor vehicles increased by 120% compared to the previous year. This surge in green investments was primarily driven by small businesses, with electric vehicle financing for the sector skyrocketing by 346%. CommBank’s Green Vehicle and Equipment Finance played a crucial role in supporting these investments.
Not only did small businesses invest in EVs, but manufacturers also showed a 24% increase in investments in new assets such as manufacturing lines, forklifts, and scissor lifts. Regional manufacturers and agribusinesses led the way, with funding activity for new assets rising by 42%. These purchases included moulding machines, packing and cutting machines, silos, and other food manufacturing machinery.
Grant Cairns, CBA’s Executive General Manager of Business Lending, explained that businesses are also focusing on energy transition and improving energy efficiency through equipment upgrades and the adoption of electrified transportation and replacement fleets. Cairns attributed this shift to customers taking advantage of government rebates and subsidies while looking for long-term strategies to reduce costs and showcase returns on investment.
To further support small businesses’ cash flow, the federal government extended the instant asset write-off scheme in its latest budget. This extension was welcomed by Cairns, who emphasized the role of government support in propelling the energy transition trend among small businesses. However, Bruce Billson, Australian Small Business and Family Enterprise Ombudsman, stressed the importance of providing certainty to small businesses regarding tax breaks related to the instant asset write-off and energy efficiency upgrades announced in the previous year’s budget. The legislation for these measures has not yet been passed, leaving small businesses with limited time to meet the eligibility criteria for the schemes.
Andrew Conway, CEO of the Institute of Public Accountants (IPA), expressed concerns that business owners may have lost interest in investing in ageing capital assets due to the lack of profitability. He highlighted the need for an improvement in profitability to reignite small businesses’ interest in investing. Ombudsman Billson echoed this sentiment, emphasizing the importance of certainty in tax breaks to encourage small businesses to invest in new equipment and technology that can drive innovation and productivity.
In conclusion, small businesses in Australia are increasingly investing in greener assets, with electric vehicle financing and spending on hybrid motor vehicles experiencing significant growth. CommBank’s data highlights the leading role of small businesses in driving green investments. Manufacturers have also shown increased investments in new assets. However, providing certainty regarding tax breaks and incentives is crucial to ensure small businesses can plan and make important investments that enhance their capacity, productivity, and innovation. Government support, such as the extended instant asset write-off scheme, plays a vital role in supporting small businesses’ cash flow and encouraging the energy transition trend.
