The Government announced a range of expenditure measures to stimulate growth in key sectors, while also addressing priority policy areas, including the country’s digital capabilities and funding to support women.
- $94.7 billion of stimulus spending is included in the Federal Budget 2021-22.
- The increase in the Government’s infrastructure spending commitments by a further $15.2 billion over ten years will create opportunities for the middle market to provide critical inputs that will help to improve the overall productivity of the Australian economy.
- Additional measures to make home ownership a reality for more Australians were announced, including the extension of the New Home Guarantee, the introduction of the Family Home Guarantee, and an increase to the amount that can be released under the First Home Super Saver Scheme
The increase in the Government’s infrastructure spending commitments by a further $15.2 billion over ten years will create opportunities for the middle market to provide critical inputs that will help to improve the overall productivity of the Australian economy.
A number of the announcements are existing projects and may also rely on funding from State Governments. Attention will need to be paid as the unity of the crisis gives way to traditional political point scoring.
The infrastructure spending aims to boost the economy and, as in Victoria, the Government is looking to have this spending filter through all sectors — not just provide work to large construction companies. This will benefit the middle market, along with the industry’s lawyers, architects, engineers amongst others. The additional announcements are expected to create over 30,000 jobs.
NSW topped the list with $3.3 billion for projects, including $2 billion for upgrades to the Great Western Highway between Katoomba and Lithgow and $500 million for Princes Highway Corridor upgrades. Additionally, $548.5 million is being allocated to road safety and community infrastructure projects.
South Australia followed with $3.2 billion for projects, including $2.6 billion for the North-South Corridor – Darlington to Anzac Highway and $148 million for Stage 2 of the Augusta Highway Duplication. A further $173.9 million is being allocated to road safety.
Victoria received $3 billion for projects, which included $2 billion for the Melbourne Intermodal Terminal, $380 million for the Pakenham Roads Upgrade and $250 million for Monash Roads Upgrades. An additional $373.5 million is being allocated to road safety and community infrastructure projects.
Queensland received $1.6 billion, followed by Western Australia with $1.3 billion, while the Northern Territory, ACT and Tasmania made up the balance.
As expected, additional measures to make home ownership a reality for more Australians were announced.
The Family Home Guarantee will provide 10,000 guarantees over four years to single parents, allowing property purchases with just a 2% deposit. Similarly, the New Home Guarantee will run for a second year, providing a further 10,000 guarantees in 2021–22. This allows first home buyers to buy a new build home or build a new property with a deposit of 5%. Finally, the Government has increased the amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.
These initiatives, along with an extension to the HomeBuilder construction commencement period, will also support the residential construction sector, which is set to benefit from over $30 billion in construction activity, increased house approvals and improved construction activity through 2021 and into 2022.
States and Territories will also benefit from an additional $124.7 million of funding to increase public housing stock and help in the delivery of provider’s obligations under the 2011 Fair Work decision on Social and Community Services wages.
The business sector, including manufacturers, will benefit from the extension of accelerated depreciation allowances for a further twelve months, along with an extension of the loss carry back provisions to June 2023.
For businesses that are innovative and developing patentable technologies, the Government has introduced a ‘patent box’ that will ring fence earnings from patented medical and biotechnology innovation to be concessionally taxed at 17%.
The manufacturing sector will also continue to benefit from the extension of the Boosting Apprenticeship Commencements wage subsidy and short courses to ensure younger workers are job ready.
Middle market businesses have embraced digital technologies to evolve and adapt during the COVID-19 pandemic and the Budget recognises that more needs to be done. A $1.2 billion Digital Economy Strategy has been announced and will include funding to support small to medium businesses to digitise their processes.
Around $200 million of this funding will be committed to overhauling the myGov system, and a further $301 million will go towards enhancement of the My Health Record system.
Businesses are being encouraged to continue to invest in this area, with a change to the way in which intangible assets can be depreciated. Intangible assets can now be prescribed a useful life by the asset owner, in line with depreciation of tangible assets.
In striving for a more resilient and secure Australia, the Budget aims to increase farm gate output to $100 billion by 2030. Initiatives to drive this include building new water infrastructure under the $3.5 billion National Water Grid Fund, opening up new irrigated areas, providing more water to farmers and creating more jobs in the industry.
Women’s safety and childcare
Women are key to a thriving middle market sector and the Budget recognises that having women in visible positions of leadership is central to the changes required. The Government announced $1.1 billion to support women feeling safe at work and online. These initiatives include addressing violence against women and children, ensuring Australian workplaces are free from sexual harassment and improving the accessibility and quality of women’s health services. A further $1.7 billion was announced to strengthening women’s economic security by improving the affordability of childcare, as well as supporting women’s financial security and employment.
Respecting and providing dignified care to older Australians is at the heart of many of our client’s business and personal beliefs.
Responding to the limitations and flaws of the aged care sector revealed in the Royal Commission, the Government has announced a $17.7 billion aged-care reform package. This package will spearhead a major funding program for Government services, including improved workforce training and education for the sector.
By 2024-25, aged care programs will cost $31 billion, almost 5% of all federal expenditure. The two pillars of the policies announced are 80,000 Home Care Packages over the next two years and $7.8 billion to support the planned changes to the funding model, plus a daily fee supplement of $10 per resident per day.
Recognising the challenge of executing this increased effort in the sector, the Government is supporting talent pool growth by creating 33,800 training places through the JobTrainer program. These initiatives will allow operators to support more aging Australians at a higher level of care. While this appears to meet the initial expectations of the Royal Commission, much of the structural change and mechanisms to ensure effective operations and oversight remains to be designed and implemented.
Health and disability
The continued protection of the Australian economy from COVID-19 disruption remained a central part of the Budget’s health initiatives, with the provision of 170 million doses of the vaccine and other associated protective health initiatives costing $3.4 billion.
The Government also recognised the need for increased mental health support across society, allocating additional funding of $2.3 billion to create new services and support existing programs. Disability spending also continues to grow, with NDIS expenditure expected to reach $28.5 billion in 2021-22. The Government has also committed to a further $13.2 billion in disability spending over the coming 4 years. This increase in funding could drive growth and M&A opportunities for many businesses in the broader health sector.
While the Government has made much of the record school funding planned for 2021, the $23.4 billion allocated for education is on trend from prior years and includes no significant new initiatives.
English-language and non-university higher education providers will receive a $53.6 million funding package, which includes funding for 5,000 short course places for domestic students. Grants to help with the improvement of online course delivery will also be available.
The existing Boosting Apprenticeship Commencements wage subsidy will grow by a further $2.7 billion to support on-the-job training of apprentices and trainees. At the other end of the education journey, the Budget provides an additional $2 billion for pre-school education over the coming four years.