Investment and jobs creation sit at the heart of the 2020-21 Federal Budget, with a raft of measures designed to boost business confidence and keep companies hiring and spending.
National Chairman of the Pitcher Partners National Association John Brazzale says the quickfire measures announced tonight are to encourage firms to spend, including allowing the full cost of eligible assets to be deducted by businesses, with turnovers up to $5 billion.
“For middle-market businesses, the initiatives are designed to reward those with the money able to invest in new equipment and new opportunities,” Mr Brazzale said.
“The Treasurer called the move a game-changer, and it opens the door for businesses wanting to level-up their production or capacity, so they can bring forward purchases after 7.30pm AEDT today and first used or held ready for use before 30 June 2022.
“For those with tax losses last year, this year or next, they can be offset against previously taxed profits — rather than having to be carried forward against profits in future years. This measure will also apply to corporate tax entities with turnover up to $5 billion and will no doubt appeal to many.
“On the jobs front, we have seen the shape of what could be called JobKeeper 3.0. Firms that are looking to grow are incentivised to hire, with employers able to claim $200 each week for every employee hired after tomorrow aged between 16 and 29, and $100 each week for every employee aged between 30 and 35.”
The new JobMaker Hiring Credit will provide up to $10,400 a year for new employees, who have been on JobSeeker, Youth Allowance or the Parenting Payment for at least one of the past three months. These people will need to work more than 20 hours a week.
The measure is predicted to support around 450,000 jobs, about four times the number for the Boosting Apprentices Wage Subsidy for new apprentices or trainees, which will see eligible businesses reimbursed up to 50 per cent of an apprentice or trainee’s wages worth up to $7,000 per quarter.
“Providing subsidies to support businesses in hiring those younger Australians who may have been seeking employment for some time may help in addressing unemployment,” Mr Brazzale said.
“While subsidies can reduce pressure on businesses, it must be noted that it’s not a long-term solution to the deeper structural issues that need to be addressed.”
For individuals, the back-dated tax cuts will put an immediate spring in their spending, although this may be one area of the Budget that could prompt some political pushback. Labor, while committed to bringing forward stage two tax cuts, has already warned it will scrutinise carefully a proposal to bundle them with business tax measures.
“Bringing forward the tax cuts will act as a pay rise for many, taking the burden off businesses that will continue to face pressure on expenses,” Mr Brazzale said.
“But other groups are less fortunate. Self-funded retirees are notably absent from the Budget, and regional communities are likely to have hoped for more direct support.”
While this Budget is designed to get things moving again, Mr Brazzale noted that now is the opportunity to make the key structural reforms needed to build a sustainable economy and to see those changes in the next Federal Budget.
“In the midst of domestic and global uncertainty, it is no surprise that the Federal Budget is focused on the here and now, but the measures announced don’t deliver the future vision required for Australia’s long-term recovery,” he said.
“The Budget fails to incentivise the growth of intellectual property, Australian resourcefulness and digital change needed to become a value-add economy.
“We will need new industries and faster creation of ideas that can be taken to the world. We will need serious investment in sectors that are primed for growth and support for sectors that need to transition. We will need a tax system and an industrial relations system robust enough for dynamic global markets.
“As our Pre-Budget submission noted, business wants investment with impact, rebuilding Australia’s manufacturing sector, incentivising businesses to invest in practices that create value, modernising the country’s industrial relations framework and simplifying complex structures.
“They seek incentives for growth in future-focused industries and targeted support for those sectors most punished by the pandemic.
“These are big structural reforms that have been left off the list this time and — while that is understandable — by the next Budget in 2021 Budget we would want to be seeing the transformational, system-wide changes that will be required to move Australia’s economy forward.”