Tonight’s Federal Budget – a month early to make way for a May election – is already being dismissed as the Coalition Government’s campaign launch. A surplus is promised ‘with no new taxes’, which Australian’s will have to get used to hearing repeated over the next five weeks. All agree this Budget is a political document rather than an economic one. The big question is will it be enough of an election sweetener to convince the Prime Minister to schlep to the Governor General’s residence at the weekend to call the election? (That would negate the need for MP’s to return to Canberra for the traditional Budget Estimates sitting.)
In a fevered attempt to gain some electoral traction on the back of 50 poll loses in a row, a number of policies and extra spending have been released to favoured media outlets over the past fortnight. This includes bringing forward already announced income tax cuts, boosts to healthcare and cash grants for pensioners to cope with high electricity bills, acknowledging that the cost of living is taking its toll. This Budget is also designed to ward off Labor’s claims that the Coalition is a friend of the ‘top end of town’, threatens Medicare, education spending or the rigorous policing of banks and insurance companies.
Clearly, Labor’s taunts that the Morrison government is ‘soft on big business’ has left bruises. Regulators, criticised as sloppy at the recent Banking Royal Commission, have scored funding increases (expect some headline grabbing prosecutions).
There is also money for underwriting energy projects, including the refurbishment of a coal fired station in NSW, and $500 million in healthcare – with grants to research projects based in the electorally under-siege Health Minister’s home state of Victoria.
With plenty of funds to play with, thanks to a low dollar, higher rates of tax revenue and booming commodity prices, the Government is spending big in the form of ‘congestion busting’ (another catch phrase we’ll be hearing a lot) infra structure projects. Much of this spending will be in the very disgruntled and long suffering bush, which punished the Nationals in the NSW election last month. The government will be hoping that the tax cuts and advances will get Australia spending to ward off a slowing economy and consequent employment threats. Cynics claim the government figures it will lose the May election, so wants to spend the cash and leave a Shorten Labor Government with an empty cupboard.
Business and Tax
- Bring forward the promised 2022 income tax cuts $158 billion ‘tax relief’. A single income family gets up to $1,080/year. Families on a dual income up to $2,160/year
- Small business tax cuts – 25%, Increasing asset write off from $25,000 to $30,000
- Funds to ATO to crackdown on tax dodging and $600 million boost for financial regulators ASIC and APRA to deal with banking royal commission fallout
Infrastructure & Regional Development
- $100 billion over ten years
- Urban congestion fund gets $4b including $500 million for a “commuter car park fund” that for better access to public transport.
- $5b for the Melbourne Airport rail link and feasibility studies for that old chestnut, high speed rail linking regions to cities
- $253.5m for ‘congestion busting’ in Sydney and NSW Central Coast, as part of a nation-wide billion dollar spend on road upgrades, and another billion for seven freight networks aimed at regional businesses.
- $2billion for climate solution fund to help reduce greenhouse gasses. $100m environment fund for local community projects
- 9 billion in the Future Drought Fund
- 0b for emergency response fund to cover natural disasters.
- $34 million Agricultural Stewardship to promote sustainable agricultural practices
- National Electric Vehicle Strategy to managed transition to new vehicle technology and infrastructure.
- More funds for the already announced Snowy Hydro
- Underwriting of power projects, with the ‘kite’ being flown last week to underwrite coal projects.
- 4 million to support feasibility studies into micro‑grids
- $79.2 million to help households, businesses and community groups better understand their energy consumption and invest in more energy‑efficient appliances.
- $331 million for listings on the Pharmaceutical Benefits Scheme (PBS), including medicines to treat lung, bladder, kidney and skin cancers, and leukaemia. Announced that Besponsa, a medicine for people with acute Leukaemia will be listed and cost patients $6.50 per script instead of $120k for a course.
- $80b on healthcare, including spending includes $461 million for a youth mental health strategy, and funding for 30 new Headspace
- $496m for Victorian Cancer research;$220m for Heart Disease research; 200m out of pocket expenses for health scans
Education, Industry and Technology
- $3.4m to encourage women to take up STEM courses
- Ten training hubs to train youth for work
- $453 million to extend support for the 2020 school year for pre-schoolers
- $17.7 billion in the university sector
- $25m to investigate privacy breaches by technology companies.
- $525 million skills package to upgrade the vocational education and training (VET) sector including creating 80,000 new apprenticeships in industries with skills shortages
- $10m Cyber bullying fund to train children to be safe online.
The full list of Budget Papers at: www.budget.gov.au
Jacquelynne Willcox is EVP and Managing Director of Powell Tate Australia