Federal Budget Briefing 9 May 2017
Executive Director ACT and National Policy Advisor Leanne Hardwicke last night joined 260 representatives from peak bodies around Australia for the Federal Budget lockup. Housing policy was the centrepiece with a wide-ranging package announced. Read the full bespoke budget de-brief prepared for Institute members here.
The Economy
• The Budget forecasts that global economic conditions are improving. The outlook for business investment and industrial production in several major economies is picking up. Business and market sentiment have strengthened as confidence in global prospects has improved.
• Growth in the Australian economy is expected to rebound to 2¾ per cent in 2017-18 and 3 per cent in 2018-19 as the detraction from mining investment eases and as growth in household consumption and non-mining business investment improves.
• Jobs are continuing to be created in the services and construction sectors.
• The budget is projected to return to balance in 2020-21 and remain in surplus over the medium term. The underlying cash balance is expected to improve from a deficit of 1.6 per cent of GDP in 2017-18 to a projected surplus of 0.4 per cent of GDP in 2020-21.
Tax
• The Government is committed to cutting the company tax rate to 25 per cent for all businesses to increase Australia’s competitiveness, attract investment, and protect jobs from being taken overseas
• The Government is extending the $20,000 instant asset write-off for a further 12 months to 30 June 2018 for businesses with annual turnover less than $10 million, improving their cash flow and helping them to reinvest in their business and replace or upgrade their assets.
• The Government will provide up to $300 million over two years to States that reduce unnecessary regulatory restrictions on competition and small businesses.
Temporary migration – 457 visas
• The subclass 457 visa will be abolished. In its place, the Government will introduce a new temporary skill shortage visa which will have tighter conditions and stricter safeguards.
Affordable housing
• Create a new $1 billion National Housing Infrastructure facility to fund critical infrastructure, such as water infrastructure, that will speed up the supply of housing.
• Working with the States to deliver planning and zoning reform that speeds up development.
• Releasing suitable Commonwealth land, starting with Defence land at Maribyrnong in Melbourne, for housing development and introducing an online Commonwealth land release register.
• Investing more than $70 billion from 2013-14 to 2020-21 on transport infrastructure across Australia.
• Specifying housing supply targets in new agreements with the States and Territories.
• Working with State and Territory governments and the private sector to identify any impediments to rent-to-buy and shared equity schemes and promote the expansion of these schemes to help more low to moderate income Australians into home ownership.
• Helping first home buyers to save a deposit through voluntary contributions into superannuation via a new First Home Super Saver Scheme.
• Reducing barriers to downsizing to free up larger homes for families.
• Improving the targeting of housing tax concessions.
• Strengthening the capital gains tax rules so that foreign investors pay their fair share of capital gains tax.
• Reforming foreign investment rules to discourage investors from leaving their property vacant.
• Requiring States and Territories to meet social and affordable housing targets under revised funding arrangements (to replace the current National Affordable Housing Agreement).
• Providing $375 million to give funding certainty to providers of homelessness services.
• Establishing a National Housing Finance and Investment Corporation to operate an affordable housing bond aggregator.
• Providing tax incentives – by increasing the capital gains tax concession to 60 per cent – to increase private investment in affordable housing.
Energy
• The Government will provide around $90 million to promote gas supply. The Government has also secured gas industry commitments to improve domestic supply.
• The Government has asked the ACCC to undertake inquiries into competition in retail electricity and gas markets.
• The Government will invest in new generation, transmission and storage capacity. Snowy 2.0 would provide a 2000 megawatt increase in capacity. Funding is also being provided to investigate new gas pipelines and for energy infrastructure in South Australia.
• Investing in new low emissions technology. The Clean Energy Finance Corporation has provided more than $3 billion of support to new technologies.
• The Government’s long-term plan will be informed by independent, expert advice, with a review being conducted by Australia’s Chief Scientist, Dr Alan Finkel AO.
Child care
• From 2017-18 to 2020-21, the Government will invest $37.3 billion in child care, including before and after school care, to ease cost of living pressures for around one million Australian families.
• From 2 July 2018, the single simplified, means-tested Child Care Subsidy will replace the Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance Program.
• The Child Care Subsidy will ensure families on low to middle incomes of $185,710 or less (in 2017-18 terms) who need to use more child care will not face an annual cap. An annual cap of $10,000 will apply to families earning more than $185,710 (in 2017-18 terms).
Higher education
• The Government will no longer proceed with the 20 per cent reduction in Commonwealth Grants Scheme funding.
• Universities will be subject to an efficiency dividend of 2.5 per cent in 2018 and 2019, a dividend that will be absorbed by universities and not be passed on to students.
• From 2018, students will contribute an additional 7.5 per cent, to be phased in over four years, which can still be met through the Higher Education Loan Program (HELP) scheme so no student will face upfront fees.
Regions
• The Regional Investment Corporation will be established to streamline the delivery of $4 billion in concessional loans, including the $2 billion National Water Infrastructure Loan Facility.
• The Regional Growth Fund will invest $472 million in regional infrastructure projects that back communities’ plans to grow their local economies and adapt to the changes taking place through globalization and technological change.
• Melbourne to Brisbane Inland Rail will commence in 2017–18. The Government will provide an extra $8.4 billion to the Australian Rail Track Corporation to deliver Inland Rail.
• The Government’s new commitments to regional growth extend the success of existing programs following the $298 million investment in the Building Better Regions Fund and the $220 million investment in the Regional Jobs and Investment Package. These initiatives will complement the Government’s City Deals with recently signed deals for Launceston and Townsville.
• The Government is investing more than $33 million in a series of measures to ensure workers can access the skills training and services they need. These include $24 million for Rural and Regional Enterprise Scholarships and $9.1 million for access to telehealth psychological services.
• As a direct employer, the Government will promote confidence in regional Australia by exploring opportunities to decentralise suitable Commonwealth agencies over the course of 2017.
Infrastructure
• The Government is committing over $70 billion from 2013-14 to 2020-21 to transport infrastructure across Australia, using a combination of grant funding, loans and equity investments.
• The Government is establishing a 10-year allocation for funding road and rail investments, recognising that many transformational projects are planned and built over many years. This will deliver $75 billion in infrastructure funding and financing from 2017-18 to 2026-27.
• The Government is identifying and pursuing ways to deliver infrastructure through more innovative financing methods, rather than signing cheques to the States and Territories.
• New investments in this Budget include:
• In Western Australia, $1.6 billion in new projects, including $100 million towards better road access to the Fiona Stanley Hospital Precinct and $700 million towards the METRONET rail project.
• A $1 billion infrastructure package for Victoria, including $500 million for regional passenger rail, with $100 million for Geelong Rail Line upgrades, a further $20.2 million for Murray Basin Rail and $30 million towards a rail link to Tullamarine Airport.
• In Queensland, $844 million for additional projects on the Bruce Highway, including upgrades to the Pine River to Caloundra section.
You can read our media release here.
