REB gives its own rundown of the biggest winners and surprise benefactors of what’s been coined Australia’s COVID-19 “recovery” budget.
The headline of federal Treasurer Josh Frydenberg’s speech to Parliament, in which he revealed the 2021–22 budget, simply read: “Securing Australia’s recovery”.
In it, he reflected on Australia having “come so far since the height of the pandemic”.
He began by detailing the economic environment in which Australia finds itself.
Here are some of the key figures:
- The COVID-19 recession will reach a deficit of $161 billion in 2021.
- Net debt will increase to $617.5 billion in 2021.
- Economic contraction of 2.5 per cent has occurred since the onset of COVID-19.
- Unemployment now stands at 5.6 per cent.
- Consumer sentiment is at 11-year high.
In a bid to further secure the said recovery, Mr Frydenberg outlined details of a plan in place to see the unemployment rate fall below 5 per cent by late 2022.
The economy is also forecast to grow by 5.24 per cent in 2021, and by 2.75 per cent in 2022.
Some of the headline measures supported by this year’s budget include:
As previously reported by REB, three major schemes underpin the government’s efforts to support home ownership.
These are the establishment of a Family Home Guarantee, expansion of the New Home Guarantee, and an increase to the First Home Super Saver Scheme.
More information about these initiatives can be found here.
More than 10 million Australians are expected to benefit from an extended tax cut which will see low and middle-income earners benefit by up to $1,080.
Business tax relief
In his budget speech, Mr Frydenberg said “small and family businesses are the engine room of our economy”.
“They are at the heart of every local community.”
Current tax breaks which see private businesses write off the full value of any eligible asset they purchase will also be extended by one year, until 30 June 2023.
Mr Frydenberg has also noted that the government will deliver more than $16 billion in tax cuts to small and medium businesses by 2023–24, with around $1.5 billion flowing in 2019–20. This, he said, “includes reducing the tax rate for small and medium companies, from 30 per cent in 2014–15 to 25 per cent from 1 July 2021”.
The government also revealed it will be extending temporary full expensing and temporary loss carry-back for an additional year until 30 June 2023. This will see an additional $20.7 billion in tax relief to businesses over the forward estimates period.
“Combined, the extension of these two measures is estimated to deliver an additional $20.7 billion in tax relief to businesses over the forward estimates period. An estimated $320 billion worth of investment is expected to be supported by these incentives,” the Treasurer said.
“The temporary full expensing and temporary loss carry-back measures are estimated to boost GDP by around $2.5 billion in 2020–21, $7.5 billion in 2021–22, and $8 billion in 2022–23, and create around 60,000 jobs by the end of 2022–23.”
A new “independent umpire” — the Administrative Appeals Tribunal (AAT) — will adjudicate disputes between small businesses and the ATO when it comes to debt recovery actions, in a bid to take disputes of this nature out of the court system.
Considered a “key” measure of this year’s budget, an additional $1.7 billion is set to be invested in affordable childcare.
The childcare subsidy annual cap will be removed from July 2022, allowing increased childcare subsidies to be available to families with two or more young children.
Skills and training
The JobTrainer fund will be doubled thanks to this year’s budget, supporting more than 450,000 new training places to upskill jobseekers and young people.
More than 170,000 new apprenticeships and traineeships will also be supported, at a cost of $2.7 billion.
Businesses are set to benefit from a $1.2 billion investment in digital capabilities.
Funding is set to go towards building out Australia’s artificial intelligence (AI) capabilities, building the digital capacity of small and medium-sized businesses, strengthening cyber security, supporting digital skills, and providing investment incentives to businesses.
Read more on this here.
The Treasurer confirmed the government is spending $10 billion over 10 years on a number of infrastructure projects, including:
- $2 billion initial investment for a new Melbourne Intermodal Terminal for the transfer of freight.
- $2.03 billion for Great Western Highway Upgrade (Katoomba to Lithgow) construction of east and west sections in NSW.
- $400 million for Inland Freight Route (Mungindi to Charters Towers) upgrades in Queensland.
- $161.6 million for the Truro Bypass in South Australia.
- $160 million for Agricultural Supply Chain Improvements – “Package 1” in Western Australia.
- $150 million for National Network Highway upgrades (Phase 2) in the Northern Territory.
- $80 million for Bass Highway safety and freight efficiency upgrades in Tasmania.
- $26.5 million for William Hovell Drive duplication in the ACT.
A further $250 million is set to go towards regional community infrastructure projects under the Building Better Regions fund.
Keep an eye out for further analyses, commentaries and insights from REB regarding the 2021–22 federal budget in coming days.
ABOUT THE AUTHOR
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.