With Australia in its first recession in almost 30 years, this year’s Federal Budget was always going to be about kick-starting a post COVID-19 recovery. And so it proved; all-in on a private sector-led recovery with consumers encouraged to spend and businesses encouraged to invest and hire.
Think of it as a (needed) massive bridging loan that the ‘future us’ will have to pay back.
These budget proposals are not confirmed until they pass through Parliament and become legislation. Labor has signalled it will back the income tax cuts and is “inclined to support” the business incentives, but we will find out more later when Anthony Albanese delivers his Budget response tonight.
While the list below is not exhaustive, we’ve provided some of the key takeaways from the night.
- Real GDP is forecast to fall by 3.75% in 2020 before recovering in 2021, growing by 4.25%.
- Unemployment is expected to peak at 8% in the final quarter of 2020, before steadily declining to 6.5% by mid-2022.
- Unlike last year when the talk about was delivering a budget surplus, the government now expects the Federal budget deficit to peak at a record $214 billion this financial year.
- Commonwealth net debt is expected to hit almost $1 trillion in 2023/24.
- More than 11 million Australians will receive tax cuts.
- The stage two income tax cuts scheduled for 2022 will be brought forward so they take effect from 1 July 2020.
- The Low Income Tax Offset (LITO) will increase from $445 to $700.
- The upper limit of the 19% tax rate will increase from $37,000 to $45,000 and the upper limit for the 32.5% tax rate will increase from $90,000 to $120,000.
- At this stage there were no announcements on the stage 3 tax cuts due in 2024.
- Businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the first year they are used.
- The Small and Medium Enterprise (SME) tax concessions will be extended from the current $10 million turnover limit to include businesses with turnover of up to $50 million.
- The superannuation proposals centred around the retail and industry fund environments rather than those with self-managed super funds.
- Australians will automatically keep their current superannuation fund when they change employers, which should lower the number of multiple accounts held and therefore fees and premiums (currently over 4 million Australians have multiple super accounts).
- Super products will be subject to annual benchmarking tests and where a fund is underperforming it will be required to inform its members.
- To help with comparing super funds a new interactive online comparison site called ‘YourSuper’ will be released.
- The Government has committed to an extra $14 billion on top of the $100 billion ten-year infrastructure program.
- This is expected to be allocated over the next four years for “new and accelerated” projects across the states and territories.
- $7.5 billion of this is for transport infrastructure around the country.
- The funding for “shovel-ready projects” includes $2 billion for road safety initiatives and $1 billion for the Local Roads and Community Infrastructure Program.
- It is hoped these measures will create 40,000 more jobs.
- $4 billion on ‘JobMaker’ hiring credits to support 450,000 people aged between 16 and 35 get into work.
- $1 billion on a ‘JobTrainer’ fund to support training places.
- $1.2 billion to subsidise wages for 100,000 new apprenticeships.
- $231 million over four years to deliver job opportunities to support parents. $25 million of this to support women in Science, Technology, Engineering and Mathematics (STEM) industries.
- $1.9 billion to support low emissions and renewable technologies.
- $233 million for national parks.
- $250 million over four years to modernise recycling infrastructure and reduce waste.
- $67 million for the protection of our oceans.
- $328 million to help agricultural exporters with the recovery from drought, bushfires and COVID-19.
- $550 million regional package to support tourism, rural health workforce, manufacturing and technology.
- $4.9 billion in health measures to deal with COVID-19 including support for hospitals, protective equipment, vaccines and treatment.
- $750 million for COVID-19 testing.
- $112 million to continue Medicare-funded telehealth.
- Extra $746 million to support senior Australians in aged care, workers and responders to the pandemic.
- $62 million over four years to improve access to mental health services and $47 million over two years for additional mental health and crisis support services in Victoria due to the pandemic.
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