Federal budget briefing 11 May 2021
This had been billed as a high spending budget and it does contain a range of measures to deal with economic recovery focused on the major effects of the pandemic. More than $53bn in new stimulus payments and funding for key services have been announced to attempt to ensure a COVID-19 recovery, with the prospect of a balanced budget put-off for at least another decade.
The primary focus is on private sector-led growth to create jobs and drive the unemployment rate lower. There is also temporary and targeted support to Australian regions and sectors most impacted by COVID-19.
Major initiatives include:
- $1.9 billion for the COVID-19 Vaccination Strategy
- $1.5 billion to extend a range of COVID-19 health response measures.
- $2.7 billion to extend the Boosting Apprenticeship Commencements wage subsidy
- $1.7 billion to support an increased Child Care Subsidy for families with second and subsequent children aged five years and under
- $1.2 billion to implement a comprehensive Digital Economy Strategy
- $17.7 billion to transform the aged care system
- $2.3 billion for mental health and suicide prevention services
- $13.2 billion for the National Disability Insurance Scheme.
- Programs to improve women’s safety, economic security, health and wellbeing,
- Shoring up Australia’s fuel security.
- $537.6 million to strengthen regions
- $486.3 million to protect our environment
- $1.6 billion to fund clean energy technology
The Australian economy has shown resilience in the face of the COVID‑19 pandemic, with the economy expected to have exceeded its pre-pandemic level of activity in early 2021. The unemployment rate is expected to fall to 5 per cent in mid‑2022 before falling further to 4¾ per cent in mid‑2023.
Over the next four years, the deficit is expected to halve. The underlying cash deficit in 2021‑22 is forecast to be $106.6 billion (5.0 per cent of GDP). This is expected to improve over the forward estimates to a $57.0 billion deficit (2.4 per cent of GDP) in 2024‑25 and to a deficit of 1.3 per cent of GDP by the end of the medium term.
The extension of homebuilder timelines is expected to avoid a sharp drop off when government incentives eventually end. It is forecasting 2.5 per cent growth this financial year for dwelling investment before falling flat next financial year and then declining 1.5 per cent in financial 2023. Net overseas migration will fall from around 194,000 persons in financial year 2020 to be around -97,000 persons by the end of this financial year, and then to -77,000 next financial year before increasing to 235,000 people in financial year 2025. This means less demand for housing and associated services.
Tax and superannuation
- Retaining the low and middle income tax offset (LMITO) in 2021-22
- Extending the two tax incentives announced in the 2020-21 Budget by one year:
- Temporary full expensing – allows eligible businesses with aggregated annual turnover or total income of up to $5 billion to deduct the full cost of eligible depreciable assets
- Temporary loss carry-back – allows eligible companies to carry-back tax losses from the 2022-23 income year to offset previously taxed profits as far back as the 2018-19 income year
- Removing the exclusion of the first $250 of deductions for prescribed courses of education.
- Modernising the individual and corporate tax residency rules
- Allowing taxpayers to self-assess the effective life of certain depreciating intangible assets for tax purposes. This will apply to patents, registered designs, copyrights, in-house software, licenses and telecommunications site access rights
- Giving older Australians, including self-funded retirees, greater flexibility to contribute to their superannuation and access their housing wealth
- Family Home Guarantee: From 1 July 2021, the Government is providing 10,000 guarantees over four years for eligible single parents with dependents to build a new home or purchase an existing home with a deposit of 2.0% Eligibility includes first home buyers or previous owner-occupier. It is based on previous First Home Loan Deposit Scheme and New Home Guarantee initiatives which have assisted 26,000 first home buyers.
- A further 10,000 first home buyers to be assisted to build a new home with a 5 per cent deposit.
- The amount that can be released under the First Home Super Saver Scheme to increase from $30,000 to $50,000.
- People aged over 60 can contribute up to $300,000 into their superannuation if they downsize their home, to freeing up more housing stock for younger families.
- $774.8 million over two years from 2021-22 for the HomeBuilder program to extend the construction commencement requirement from six months to 18 months for all existing applicants
Low emissions technology
- $565.8 million to establish international partnerships on practical low emissions projects
- $275.5 million to support up to four additional hydrogen hubs
- $263.7 million to accelerate the development of Carbon Capture Use and Storage
- $59.6 million to support a National Soil Carbon Innovation Challenge and trial new agricultural feed technologies that reduce emissions from livestock
Reducing business energy costs and emissions
- $316.7 million to help businesses and industry lower their emissions by supporting more voluntary action and helping businesses reduce their energy use
- $29.3 million to support timely assessments and improve compliance under the EPBC Act as well as more effectively managing the environmental risks associated with industrial chemicals
- $22.3 million to farmers to protect and restore native habitat
- $9.1 million to help ensure natural assets are valued and taken into account in commercial decisions
Waste and recycling
- The National Waste Policy Action Plan will be supported by $67 million to reduce the amount of food waste going to landfill and improve soil health
- $5.9 million in funding will be provided for a third round of investments in the National Product Stewardship Investment Fund. This fund supports industry to find new ways to recycle products
- Small businesses will be supported to adopt the Australasian Recycling Label. This label is a world-leading consumer education tool which helps households recycle
The Government is investing in making Australia more disaster resilient and improving preparedness, response and recovery in line with the recommendations of the Royal Commission into National Natural Disaster Arrangements through:
- establishing the new National Recovery and Resilience Agency
- enhancing Emergency Management Australia
- providing $209.7 million to establish the Australian Climate Service, enhancing the Commonwealth’s extensive climate and natural disaster risk information to build Australia’s climate resilience
$15 billion in additional infrastructure commitments including for:
- the North‑South Corridor in South Australia
- the Great Western Highway and Newcastle airport in New South Wales
- the new Melbourne Intermodal Terminal in Victoria
- the Bruce Highway in Queensland
- METRONET in Western Australia
- highway upgrades in the Northern Territory
- Light Rail Stage 2A in the Australian Capital Territory and
- Midland Highway upgrades in Tasmania.
- A further $1 billion in road safety upgrades and a further $1 billion in local road infrastructure projects.
- Building Better Regions Fund, will support a further $250 million of regional community infrastructure projects.
Australian Capital Territory
$167.3 million from 2021-22 for priority road and rail projects.
- $132.5 million for Canberra Light Rail — Stage 2A
- $26.5 million for the William Hovell Drive Duplication
- $5.0 million for the Gundaroo Drive Duplication (formerly William Slim Drive Duplication)
- $2.5 million for Beltana Road Improvements
New South Wales
The Government will provide $3.3 billion from 2021-22 for priority road projects.
- $2.0 billion for the Great Western Highway Upgrade — Katoomba to Lithgow — Construction of East and West Sections
- $500.0 million for the Princes Highway Corridor, including the Jervis Bay Road Intersection and Jervis Bay to Sussex Inlet Stage 1
- $240.0 million for the Mount Ousley Interchange
- $229.4 million for the M12 Motorway
- $87.5 million for the M5 Motorway — Moorebank Avenue and Hume Highway Intersection Upgrade
- $52.8 million for the Manns Road — Intersection Upgrades at Narara Creek Road and Stockyard Place
- $48.0 million for the Pacific Highway — Harrington Road Intersection Upgrade, Coopernook
- $32.0 million for the Toowoomba to Seymour — Upgrades to Hargraves Lane and Federation Street;
- $25.0 million for Stacey St, Bankstown — Planning
- $19.0 million for the Far North Collector Road Network, Nowra
- $18.0 million for Appin Road.
The Government will provide $323.9 million from 2021-22 for priority road and rail projects.
- $173.6 million for the Northern Territory Gas Industry Roads Upgrades
- $150.0 million for the Northern Territory National Network Highway Upgrades (Phase 2).
The Government will provide $1.6 billion from 2021-22 for priority regional and urban road and rail infrastructure projects.
- $400.0 million for Bruce Highway Additional Funding
- $400.0 million for the Inland Freight Route (Mungindi to Charters Towers) Upgrades
- $240.0 million for the Cairns Western Arterial Road Duplication
- $178.1 million for the Gold Coast Rail Line Capacity Improvement (Kuraby to Beenleigh) — Preconstruction
- $160.0 million for the Mooloolah River Interchange Upgrade (packages 1 and 2)
- $126.6 million for Gold Coast Light Rail — Stage 3
- $35.3 million for the Maryborough-Hervey Bay Road and Pialba-Burrum Heads Road Intersection Upgrade
- $10.0 million for the Caboolture — Bribie Island Road (Hickey Road — King John Creek) upgrade
- $5.0 million for the Beerburrum to Nambour Duplication Study
- $4.0 million for the Warrego Highway — Mt Crosby Road Interchange.
The Government will provide $3.2 billion from 2021-22 for priority road and rail projects.
- $2.6 billion for the North-South Corridor — Darlington to Anzac Highway
- $161.6 million for the Truro Bypass
- $148.0 million for the Augusta Highway Duplication — Stage 2
- $64.0 million for the Strzelecki Track Update — Sealing
- $60.0 million for the Gawler Rail Line Electrification
- $48.0 million for the Heysen Tunnel Refit and Upgrade — Stage 2
- $32.0 million for the Kangaroo Island Road Safety and Bushfire Resilience Package
- $27.6 million for the Overpass at Port Wakefield and Township Duplication
- $22.5 million for the Marion Road and Sir Donald Bradman Drive Intersection Upgrade
- $12.0 million for the Anangu Pitjantjatjara Yankunytjatjara Lands — Main Access Road Upgrade — Stuart Highway to Pukatja
- $5.0 million for the Greater Adelaide Freight Bypass Planning Study
- $3.1 million for the Goodwood and Torrens Rail Junctions Project
- $3.0 million for the North East Road and Nottage Terrace Intersection Upgrade
- $2.5 million for the Murray Bridge to South East Links Planning Study
- $1.0 million for the Eyre Highway Widening and Upgrade Planning Study.
The Government will also provide $40.0 million over two years from 2021-22 to continue supplementary local roads funding in South Australia.
The Government will provide $322.6 million from 2021-22 for priority road projects.
- $113.4 million for the Midland Highway Upgrades, including Campbell Town North (Campbell Town to Epping Forest), Oatlands (Jericho to South of York Plains), Ross (Mona Vale Road to Campbell Town), and preconstruction works
- $80.0 million for the Tasmanian Roads Package—Bass Highway Safety and Freight Efficiency Upgrades Package—Future Priorities
- $48.0 million for the Algona Road Grade Separated Interchange and Duplication of the Kingston Bypass
- $44.0 million for the Rokeby Road — South Arm Road Upgrades
- $24.0 million for the Tasmanian Freight Rail Revitalisation — Tranche 3 — Port of Burnie Shiploader Upgrade
- $13.2 million for Huon Link Road.
The Government will provide $3.0 billion from 2021-22 for priority road and rail projects.
- up to $2.0 billion for the Melbourne Intermodal Terminal, with specific funding arrangements, including an option for equity investment, to be settled at a later date, with an equivalent contribution to be provided by the Victorian Government
- $380.0 million for the Pakenham Roads Upgrade
- $250.0 million for the Monash Roads Upgrade
- $92.8 million for the Commuter Car Park Upgrades including Berwick Railway Station, Frankston Railway Station, and Ringwood Railway Station
- $56.8 million for the Hall Road Upgrade
- $51.1 million for the Princes Highway East, between Rosedale and the New South Wales border
- $30.4 million for the Western Port Highway Upgrade
- $20.7 million for the Princes Highway West between Colac and the South Australian border
- $17.5 million for the Dairy Supply Chain Road Upgrades
- $15.0 million for Melbourne to Mildura — Future Priorities
- $10.0 million for the Outer Metropolitan Ring/E6 Corridor Detailed Business Case
- $10.0 million for the Mallacoota-Genoa Road Upgrade.
The Government will provide $1.3 billion from 2021-22 for priority road and rail projects.
- $237.5 million for the METRONET: Hamilton Street/Wharf Street Grade Separations and Elevation of Associated Stations
- $200.0 million for the Great Eastern Highway Upgrades — Coates Gully, Walgoolan to Southern Cross and Ghooli to Benari
- $160.0 million for the WA Agricultural Supply Chain Improvements — Package 1
- $112.5 million for the Reid Highway — Altone Road and Daviot Road/Drumpellier Drive — Grade Separated Intersections
- $110.0 million for the METRONET: Byford Extension
- $85.0 million for the Perth Airport Precinct — Northern Access
- $64.0 million for the Toodyay Road Upgrade — Dryandra to Toodyay
- $55.0 million for the Mandurah Estuary Bridge Duplication
- $48.0 million for the Great Northern Highway — Broome to Kununurra (Nellie Springs to Sally Downs Way and Arthur Creek)
- $48.0 million for the Marble Bar Road Upgrade
- $44.0 million for the Indian Ocean Drive — Jurien Bay to Brand Highway
- $31.5 million for METRONET: High Capacity Signalling
- $21.5 million for the Leach Highway (Welshpool Road Interchange)
- $16.0 million for the Regional State Road Safety Improvement Program
- $14.4 million for the Port Augusta to Perth (WA) — Great Eastern Highway — Walgoolan Southern Cross and Coates Gully
- $10.0 million for the Orrong Road Expressway — Graham Farmer Freeway to Leach Highway Planning
- $8.5 million for the Mitchell Freeway Extension — Hester Avenue to Romeo Road
- $7.6 million for the Wanneroo Road — Dunstan Road to Romeo Road — Duplication
- $7.2 million for Mitchell Freeway Widening Southbound — Cedric Street to Vincent Street
- $4.0 million for the Thomas Road and Nicholson Road Upgrade
- $2.0 million for the Kalgoorlie Rail Realignment — Business Case.
Community Development Grants Program
The Government will provide $55.5 million over three years from 2021-22 to deliver new projects that support local communities across Australia. Key projects include:
- $25.0 million towards the Rockhampton Aviation Maintenance Repair and Overhaul Facility in Queensland
- $13.0 million towards the Yeppoon Aquatic Centre in Queensland
- $6.0 million towards the upgrades for the Netball South Australia Stadium in Adelaide, South Australia
- $5.4 million towards the Southern Adelaide Materials Recovery Facility in South Australia
- $2.5 million towards the Isis Central Sugar Mill in Cordalba, Queensland
- Budget Paper No. 2
- Page 148 | Part 2: Payment Measures
- $2.0 million towards the Tasmanian Holocaust Education and Interpretation Centre in Hobart
- $0.8 million towards the Canberra Holocaust Museum and Education Centre in the Australian Capital Territory
- $0.6 million towards the Nedlands Surf Life Saving Club Upgrade in Swanbourne, Western Australia.