More regulation, less innovation in the Federal Budget

By Sabine Wolff - May 9, 2017

Pitcher Partners welcomes the Turnbull Government’s efforts to back small business and invest in infrastructure to grow the Australian economy.

“We welcome the government’s extension of the $20,000 instant asset write-off for businesses with turnover of less than $10m,” said John Brazzale, Managing Partner at Pitcher Partners.

“We know that this assists small businesses in reinvesting and growing their businesses.

“However, we are disappointed that more has not been done to lower taxes and extend the instant asset write off to mid-sized businesses.

“Middle market businesses are the backbone of the economy. The Turnbull Government has missed the opportunity to make a real difference in the middle market, given that the middle market accounts for around one third of economic activity.

 “Our clients sought greater simplification of the business environment, including lower taxes, and little has been done in this area to build on last year’s cuts.

John Brazzale also praised the government’s infrastructure commitments.

“We’re happy to see a focus on genuinely productive, targeted transport spending in the Budget.

“In particular, the billions of dollars in infrastructure commitments should encourage investment in nation-building projects that help businesses to move goods, services and capital around the nation.

“The direct and indirect job creation that stems from these infrastructure investments will assist mid-market businesses in expanding their markets and supply chains, creating growth across Australia.

“Our one concern on this front is that the government has not given any indication of support for public-private partnerships, which we see as critical to ensuring the construction and associated industries can grow as a result of this increased spend.

On housing, John Brazzale was pleased to see the release of government land, and the introduction of non-concessional contributions to superannuation of up to $300,000 from the sale of the principal home for older Australians downsizing.

“Removing the restrictions on non-concessional contributions for these downsizers will improve individuals’ capacity to self-fund their retirement.

“We are concerned that the government’s vacant property tax and further efforts to deter investment in the housing market by foreign investors could negatively affect supply.

“In addition to the vacant property tax, the proposed new dwelling rules that state all developers – whether Australian or foreign-based – cannot sell over 50 per cent of their stock to foreign investors will have a highly detrimental effect on housing supply.

“Property and construction have driven economic growth in Australia since the end of the mining boom and the slowdown in manufacturing.

“This measure has the potential to severely curtail activity in the property and construction sectors, and in the economy as a whole.

“Further, most new property development has been driven by foreign bank funding. With Australian banks deleveraging from property, Pitcher Partners warns of the potential for a severe reduction in both supply and in property values.

“Post-GFC economic growth in Australia has been defined by our openness to foreign investment. The government jeopardises that economic growth with any efforts to shut foreign investors out of our property market.”

Brazzale expressed concern over the proposed levy on banking deposits.

“This will be passed onto consumers in some form. Retirees in particular rely on dividends from bank deposits.

Further limits on property deductions amounts to an attack on negative gearing by stealth.

“Finally on the significant increase in the Medicare levy, we are wary that the promised quarantining for NDIS spending will not be enforced but applied to consolidated revenue.”

For further information on our pre-Budget client survey please visit: http://www.pitcher.com.au/news/pitcher-partners-federal-budget-survey

For further comment please contact:

John Brazzale, Managing Partner, Pitcher Partners, 03 8610 5110
Sabine Wolff, Media and Communications Advisor, 0419 529 577


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IN THIS SECTION:


Rob Southwell

Sydney

Managing Partner and Partner – Private Clients Group


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Ross Walker

Brisbane

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Michael Minter

Newcastle

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John Brazzale

Melbourne

Managing Partner and Partner/Executive Director - Tax Consulting


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Bryan Hughes

Perth

Managing Director


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Tom Verco

Adelaide

Managing Principal


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