Executive Director ACT and National Policy Advisor Leanne Hardwicke joined 260 representatives from peak bodies around Australia for the Federal Budget lockup on Tues May 8. Read the full bespoke budget de-brief for Institute members below. Our media release is available to view here.
The Economy
- The Budget forecasts that global growth continues to improve, with widespread growth across advanced and emerging economies. There has also been an upswing in trade globally, especially in our Asian neighbours.
- Australia is experiencing its 27th year of consecutive growth. Businesses are doing better, non-mining business investment has improved, and business conditions are at their highest level since the Global Financial Crisis.
- Strong labour market performance is expected to continue and the unemployment rate is expected to decline further. As the labour market tightens, wages are also expected to increase.
- Australia’s economy is expected to grow by a solid 2¾ per cent in 2017-18 and growth is forecast to rise further to 3 per cent in 2018-19 and 2019-20.
- The Budget is forecast to return to a modest balance of $2.2 billion in 2019-20 and increase to projected surpluses of $11.0 billion in 2020-21 and $16.6 billion in 2021-22.
Tax
- The Government will keep taxes as a share of GDP within the 23.9 per cent cap.
- The Personal Income Tax Plan will be implemented over a seven year time frame. The government will lift the 32.5 per cent tax bracket to $90,000 from 1 July 2018. Further threshold changes in 2022-23 and 2024-25 will simplify and flatten personal tax rates, with the 37 per cent tax bracket being abolished in 2024-25.
- Companies with annual turnover less than $50 million will have their tax rate cut to 27.5 per cent from 1 July 2018.
- Small businesses will also benefit from the Government extending the $20,000 instant asset write-off for a further 12 months to 30 June 2019.
- The Government has streamlined GST reporting for around 2.7 million small businesses by reducing the number of BAS GST questions to only three and scrapping the requirement for a 20 question worksheet.
- The small business entity turnover threshold has been lifted from $2 million to $10 million, which has extended access to a range of small business tax concessions.
Export and Trade
- $40.2 million over four years from 2018 19 (including $7.3 million in capital funding) for initiatives supporting the 2017 Foreign Policy White Paper, including funding for:
$19.2 million over four years to open a new Consulate General in Kolkata, India, and a new High Commission in Funafuti, Tuvalu, to promote Australia’s foreign policy and trade interests in the Indo Pacific region;
and $15.0 million over four years for a package of initiatives to support the Australian business community through building public support for open trade and investment, enhancing government engagement with business and maximising commercial opportunities in overseas markets. The Government is investing $20 million in SME Export Hubs. The Hubs will foster greater cooperation between Australian businesses, helping them grow as they work together to sell their products to the world.
- The Government will fund Australia’s participation in Expo 2020 Dubai, showcasing Australia’s culture, business and industry, including Australia’s Defence industry, as well as trade and investment opportunities.
Energy
- $37.6 million over five years from 2017-18 to support measures to improve energy affordability, reliability and sustainability. This includes funding to:
implement recommendations from the Independent Review into the Future Security of the National Electricity Market (the Finkel Review) and the Energy Security Board to support better planning and system security and to help consumers get better energy deals;
improve the functioning of the gas market, including gas pipeline regulation and law and rule changes;
support the COAG’s Energy Council’s work on energy market transformation and energy efficiency; and
deliver periodic energy security assessments to provide information to plan for energy supply and use into the future.
- The Limited Merits Review regime, which allowed electricity network businesses to appeal regulatory pricing decisions and charge more for electricity, has been abolished, limiting future network price increases on consumers’ bills.
- The emissions reduction target will be maintained at 26-28 per cent.
Housing Affordability
- Measures to unlock the supply of affordable housing remain, including the establishment of the $1 billion National Housing Finance and Investment Corporation and the release of more land suitable for housing. The NHFIC will comprise the Affordable Housing Bond Aggregator and the $1 billion National Housing Infrastructure Facility.
- The new National Housing and Homelessness Agreement will commence from 1 July 2018. This agreement will provide $7 billion in housing funding and an additional $620 million for homelessness services over the next five years, ensuring that funding for homelessness services will be ongoing and indexed.
- $4.8 million over four years from 2018-19 to the Australian Bureau of Statistics to construct better estimates of the stock of affordable housing and to improve existing survey based planning and zoning data and dwelling construction cost collections.
- $0.2 million in 2018-19 to the Australian Institute of Health and Welfare to bring together all major housing and homelessness data in a user friendly dashboard.
Aged care
- To support the choice of older Australians who wish to stay at home and avoid going into residential aged care the Government will be increasing the number of home care places by 14,000 over 4 years at a cost of $1.6 billion.
Indigenous housing
- $550 million commitment over five years from 2018–19 for a new agreement with the Northern Territory Government on remote housing, to help alleviate overcrowding and improve employment and business opportunities in remote communities. This commitment will be matched by funding from the Northern Territory Government.
Sporting facilities
- $29.7 million in 2018-19 to deliver up to 500 local community sporting infrastructure development grants of up to $500,000 to improve community sporting facilities.
Land release Queensland
- The Government will divest land currently owned by the Australian Communications and Media Authority in the Redland City local government area, Queensland, in 2019-20. The property divested can support up to 400 homes and will increase the supply of land for housing in metropolitan Brisbane.
Skills
- In addition to the Pension Loans Scheme and Pension Work bonus changes, support will be provided to older Australians who choose to stay in work, by providing wage subsidies of up to $10,000 for employers.
- The Government is providing an additional $250 million for the Skilling Australians Fund.
- The Skills and Training incentive will provide up to $2,000 to fund up-skilling opportunities for mature aged workers identified as being at risk.
Higher Education
- $123.6 million over five years from 2017-18 to the University of the Sunshine Coast, the University of Tasmania and Southern Cross University for additional Commonwealth supported places. This funding will complement previous infrastructure funding provided to these universities to support investment in regional campuses, and will support:
an additional 1,200 bachelor places in 2020, growing to 3,600 ongoing places in 2022, for the University of the Sunshine Coast’s Moreton Bay campus;
an additional 500 sub bachelor places in 2018, and 1,000 ongoing sub bachelor places from 2019, for the University of Tasmania’s Burnie and Launceston campuses;
and an additional 105 bachelor places in 2019 and 210 bachelor places in 2020, growing to 315 ongoing bachelor places from 2021, for Southern Cross University’s Allied Health Building in Coffs Harbour.
Heritage
- $23.1 million over four years from 2018-19, and $5.7 million annually from 2022 23, to establish a flagship Australian Heritage Grants Program (AHGP). The AHGP will provide grant funding to protect and promote places in Australia with Commonwealth, National or World Heritage values. The cost of this measure will be met from savings from the rationalisation of the existing heritage grants programs and from within the existing resources of the Department of the Environment and Energy.
Regions
- Creation of an additional 500 Commonwealth supported sub bachelor places and 500 places for bachelor students at Regional Study Hubs.
Intellectual Property - $0.6 million in 2018-19 to fund the development of a detailed business case to modernise IP Australia’s patents management system and streamline access to its services via digital channels. This measure will support Australian businesses to protect their intellectual property, and in so doing, support and strengthen innovation in the Australian economy.
Innovation
- $20.0 million over four years from 2018-19 to establish the Asian Innovation Strategy. This strategy will expand eligibility for the existing Global Innovation Strategy grant program to support Australian businesses and researchers in all countries, and establish a new funding stream within this program focused primarily on Asia. It will also extend funding for the ‘Australia India Strategic Research Fund’ for an additional four years.
Infrastructure
- The Budget includes $24.5 billion for new nationally significant transport projects and initiatives.
- The Government is establishing the $3.5 billion Roads of Strategic Importance (RoSI) initiative. Under RoSI, funding will be provided to upgrade key freight routes to improve road safety and better connect key sectors, such as agriculture and mining, to export markets.
- A $1 billion Urban Congestion Fund will be established to bust congestion in cities.
- The Government will provide $250 million to a newly established Major Project Business Case Fund for development and planning of nationally significant projects. New major projects include:
NSW – the Federal and New South Wales Governments will be equal partners in funding the first stage of the North South Rail Link in Western Sydney. The Government is providing $971 million for the Pacific Highway Coffs Harbour Bypass, and $400 million to duplicate the Port Botany Rail Line.;
Victoria – a commitment of up to $5 billion to the Melbourne Airport Rail Link and funding of $1.75 billion for the North East Link.;
Queensland – an additional $3.3 billion for continuing upgrades of the Bruce Highway, including $800 million for the Cooroy to Curra Section D project, and $1 billion for the M1 Pacific Motorway between Eight Mile Plains and Daisy Hill and Varsity Lakes and Tugun.;
Western Australia – a further $1.05 billion for the METRONET rail project, $944 million for the Perth congestion package and $560 million for the Bunbury Outer Ring Road.;
South Australia – $1.4 billion for future priorities on the Adelaide North-South Road Corridor and $220 million for the Gawler Rail Line electrification.;
Tasmania – $461 million for the replacement of the Bridgewater Bridge and an additional $59.8 million for the second stage of the Tasmanian Freight Rail Revitalisation program.;
Australian Capital Territory – $100 million for the Monaro Highway Upgrade.;
Northern Territory – $180 million for the Central Arnhem Road Upgrade and $100 million for the Buntine Highway Upgrade.
