CommBank data showed that small businesses’ electric vehicle financing surged 346 percent over the past 12 months.
Australian businesses are investing more in greener assets despite economic uncertainty over the past 12 months, Commonwealth Bank of Australia data showed.
Business spending on electric vehicle fleets grew by more than 325 percent while spending on hybrid motor vehicles soared by 120 percent from the prior year. CommBank’s business bank saw total vehicle and equipment financing grow 22 percent during the period.
Based on the data, small businesses are leading green investments, with the sector’s electric vehicle financing skyrocketing by 346 percent, leveraging CommBank’s Green Vehicle and Equipment Finance.
Meanwhile, manufacturers also invested 24 percent more in new assets such as manufacturing lines, forklifts, and scissor lifts.
CommBank witnessed that funding activity of regional manufacturers and agribusinesses on new assets increased by 42 percent, led by purchases of moulding machines, packing and cutting machines, silos, and other food manufacturing machinery.
“Companies are also stepping up investment in energy transition, with more businesses looking to improve their energy efficiency through equipment upgrades or the increased adoption of electrified transportation and replacement fleets,” Grant Cairns, CBA’s Executive General Manager of Business Lending, said.
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“Part of this shift is driven by customers taking advantage of government rebates and subsidies and looking at longer-term actions to reduce costs and demonstrate returns on investment.”
Mr. Cairns said it is expected that small businesses will continue to maximise their cashflow through asset financing, especially after the Albanese government’s latest federal budget included provisions for businesses.
“We welcome the extension of the federal government’s instant asset write-off scheme (IAWO) as a way to help free up cash flow for small businesses,” Mr. Cairns said.
“As small businesses lean into the energy transition—as evidenced by the sharp increase in green asset financing over the past year—government support such as the IAWO could help propel this trend.”
Small Businesses Need Certainty
Bruce Billson, Australian Small Business and Family Enterprise Ombudsman, has been urging the federal parliament to provide certainty to small businesses about two crucial tax breaks announced in the previous year’s budget. The two measures relate to the instant asset write-off and a tax-incentive for energy efficiency upgrades.
The federal budget provided for a continuation of a $20,000 instant asset write-off for small businesses with turnover under $10 million, plus a $325 rebate for energy relief for up to a million small business.
“The scheme requires eligible assets or upgrades to be first used or installed ready for use between July 1, 2023 and June 30, 2024, but with the legislation still not passed time is fast running out for small businesses to meet that deadline,” Mr. Billson said.
“This uncertainty has highlighted the need for predictability and certainty so a small business can plan in a sure-footed way for important investments that uplift the capacity, the productivity and drive innovation in their business.”
Institute of Public Accountants (IPA) CEO Andrew Conway previously said that that it might already be too late as business owners may have lost interest in investing in ageing capital assets until they see an improvement in profitability.
Meanwhile, the small business energy incentive worth up to $20,000 announced in April last year will grant a further 20 percent depreciation for eligible assets that support electrification and more efficient use of energy by small businesses with an annual turnover of less than $50 million.
“Right now, we need to be energising enterprise. We need to be giving more encouragement for people to turn an idea into an investment and to make that big decision to turn scarce resources into new capability, new equipment, new technology to help with the success of that enterprise and the livelihoods that depend upon it,” Ombudsman Billson said.
“Having that encouragement to invest in new kit, new plant and equipment, new technology is really an important signal, but what’s needed is the certainty that these tax breaks are real.”
