Designed to address the fall in economic activity caused by the pandemic and support Australia's economic recovery, the Federal Budget 20-21 announced yesterday proposes to add $507 billion in overall government support, including $257 billion in direct financial aid.
According to Treasurer Josh Frydenberg, the plan to secure Australia's future focus on growing the economy, not increasing taxes. "There is no economic recovery without a jobs recovery. There is no budget recovery without a jobs recovery. This budget is all about jobs."
More than $14 billion in investments in infrastructure, lower taxes for low and middle income earners, JobMaker credit and Job Trainer funds are among the measures set to boost employment, unlock investment, increase economic resilience and create a more competitive economy.
In today's blog post, we will provide you with an overview of the Budget 20-21 based on the Commonwealth of Australia data.
TAX RELIEF
More than 11 million taxpayers will get a tax cut backdated to 1 July this year.
Lower and middle income earners will receive tax relief of up to $2,745 for singles, and up to $5,490 for dual income families as compared with 2017-18.
The Australian Government has proposed to lift the 19 per cent threshold from $37,000 to $45,000, and lift the 32.5 per cent threshold from $90,000 to $120,000.
The table below highlights the difference in tax liability that would be applicable in 2020-2021, as compared to 2017-2018.
SUPPORTING HOUSING CONSTRUCTION
Additional 10,000 places will be available for The First Home Loan Deposit Scheme, which allows the first home buyers to purchase a home with a deposit as low as 5%.
Under the initial scheme 20,000 places were made available and this scheme was very popular amongst Australians and the available places have already been exhausted.
Now, additional 10,000 Australians will be able to buy a home sooner with the help of this Scheme.
Additional $1 billion of low-cost finance to support the construction of affordable housing, bringing the total concessional finance to $3 billion.
The budget will provide $150 million in investments for the Indigenous Home Ownership Program, helping indigenous communities to construct new homes in regional areas.
INSTANT ASSET WRITE OFF
Business with turnover up to $5 billion will be able to write off the full value of any eligible asset until June 2022.
Business owners can offset the losses incurred to June 2022 against prior profits made in or after the 2018-19 financial year.
The combination of the immediate expensing and loss carry-back measures will create an additional 50,000 jobs across the country.
YOUR SUPER FOLLOWS YOU
Australians have more $3 trillion in their superannuation accounts. To prevent unnecessary fees from multiple accounts, super accounts will no longer be automatically created every time a worker changes job.
The Government is also improving regulation on Super funds. Low performing funds will be required to notify their members of their underperformance, and subsequent poor outcomes will prevent the fund from acquiring new customers.
To improve transparency, the Government will also establish an online comparison tool. 'YourSuper" will help Australians make informed decisions about who will manage their savings.
JOBMAKER HIRING CREDIT
Created to encourage businesses to hire younger Australians, it is a subsidy immediately available to employers who hire those on JobSeeker aged 16-35.
All business, except major banks, are eligible for the program, which will pay the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35.
Expected to create around 450,000 jobs for young people, the Job Maker hiring credit is payable for up to twelve months, and new hires must work at least 20 hours a week.
INFRASTRUCTURE PROJECTS
Expanding the 10-year infrastructure pipeline, which is currently employing 100,000 Australians, the Budget 20-21 brings $14 billion in new and accelerated infrastructure projects to support an additional 40,000 jobs.
On top of the $2 billion announced in May 2020, the Government will also provide extra $3 billion towards shovel-ready projects, including $2 billion to small scale road safety projects, and further $1 billion of funding for the Local Roads and Community Infrastructure Program.
JOB TRAINER FUND
In addition to the $1 billion JobTrainer fund, established to create up to 340,000 free or low cost training places and the $2.8 billion to protect 180,000 apprenticeships and trainees, the Government announced extra $1.2 billion to create 100,000 new apprenticeships and traineeships, with a 50% wage subsidy for employers.
JOB-READY GRADUATES
To help Australians to secure employment, the budget 20-21 will fund:
50,000 new higher education short courses in agriculture, health, IT, science and teaching
12,000 new Commonwealth supported places for higher education in 2021.
2,000 indigenous students through the Clontarf Foundation to complete Year 12 and pursue further education or find employment.
HEALTH
The Budget 20-21 will double the number of Medicare-funded psychological services through the Better Access Initiative, from 10 to 20.
It will also provide over $750 million in funding for COVID-19 testing and $171 million for the extended operation of up to 150 dedicated respiratory clinics to manage and diagnose COVID-19 cases.
To support hospitals during the pandemic, the Government will provide further $1.1 billion to states and territories through the National Partnership Agreement on COVID-19 Response.
RESEARCH AND DEVELOPMENT
Additional $2 billion in Research and Development incentives.
$459 million in additional funding to Australia's National Science Agency (CSIRO).
$1 billion for new research funding for our universities.
$1.9 billion in new funding as part of our energy plan to support low emissions and renewable technologies, helping to lower emissions and address climate change.
Federal Budget Summary
To ensure Australia will emerge from COVID 10 crisis in a stronger position, the Budget 20-21 boosting prioritizes to rebuild consumer and business confidence, by growing the economy and creating jobs.
Besides the measures listed above, there are a number of other incentives and funds on cybersecurity, environment protection, gender equality and regional recovery.
To find more details about the Budget 20-21, access: BUDGET 2020-2021