Budget 2019: Headline highlights
A selection of quick highlights from the 2019 budget that governance professionals may find of interest.
- Treasurer Josh Frydenberg: “Australia is back in black, and back on track.”
- Better than expected surplus of $7.1bn by 2019/20
- GDP growth of 2.75% in 2019/2020
- Aims to create 1.25m jobs in next 5 years
- Tax cuts total $302bn – the largest since PM John Howard
Business tax cuts
Announcement: Small businesses, defined as turnover less than $50m a year, tax rate will be lowered to 25 per cent by 2021-22. Small business instant asset write-off threshold is lifted to $30,000 (from $20,000) and expanded to include businesses with a $50m turn over. Opens this up to an additional 22,000 businesses.
Also gain access to a $2bn finance fund.
No change to other corporate tax rates.
Increased regulator funding
Announcement: $600m for financial regulators ASIC and APRA
This is a position the Governance Institute has strongly advocated for, and it is excellent to see this reflected in Budget 2019.
The government also announced $2.6m to implement an industry-funded compensation scheme of last resort for consumers and small business, and $2.8m to Australian Financial Complaints Authority (AFCA) to consider old complaints going back to 2008.
The budget also provides an additional $30.7m to pay for legacy unpaid external dispute resolution determinations.
Tax avoidance crackdown
Announcement: Extra $1bn will be granted to the ATO to hunt down multinationals not paying their tax, the government estimates this measure will raise $4.6bn. Will also focus on intermediaries such as tax advisers and agents.
Announcement: New $529m skills package to support 80,000 new apprentices. Doubles the incentive payments to employers — $8k per placement. Focusing on skills shortage areas such as bricklayers, bakers and drain layers, as well as support for future high demand areas such as communications technology, advanced manufacturing and health services.
Environment and sustainability
Announcement: New $3.5bn climate Solutions Fund. $2bn of which will go to practical emission reduction activities, working with farmers and Indigenous communities. A $100m Environment Restoration Fund to deliver large-scale environmental projects.
We welcome any government inducement to drive investment in future markets, including as environmentally sustainable industries. This is especially important for business leaders to offset future environmental risks to their businesses.
Personal tax cuts
Announcement: Doubling lower-middle class tax rate (>$126k) — now save $1080 p/y, or $2160 for dual income earners (this year)
Personal tax cuts are a stimulus to the economy. This also helps make Australia a domestically sustainable, and internationally competitive market.
New tax bracket
Announcement: From mid-2024 there will be a new ‘super’ tax bracket running from $45,000-$200,000. This will be taxed at 30c on the dollar. This will account for two thirds of the population.
Huge infrastructure spend
Announcement: $100bn in infrastructure spending over ten years, including a quadrupling of the Urban Congestion Fund, which includes $500m on a commuter car park fund.
There will also be an additional $2.2bn spent on safer roads, $1bn to improve ports and freight routes, and $100m for regional airports.
Announcement: Boost of around $1.1bn (over five years), including chronic disease care for over-70s ($448.5m), increased funding for Practice Incentive Program Quality Incentive ($201.5m over five years) including aged care.
- Aged care services will get $724.8m (over five years)
- Mental Health and suicide prevention programmes get $736.6m over seven years
- The Pharmaceutical Benefits Scheme will be extended to include various cancer drugs ($331m over 5 years)
- Imaging (MRI etc.) an additional $308.9m
Overall, there are some healthy injections for both businesses and individuals which will boost the nation’s growth and competitiveness. We will await more detail on a number of these announcements, and await Bill Shorten’s Budget Reply on Thursday.