Just six months after handing down its last budget, the government has revealed a far more optimistic picture of Australia’s future in a budget that tackled everything from infrastructure to home ownership and aged care.
Presenting the Federal Budget for 2021/22 Treasurer Josh Frydenberg declared Australia is coming back in the face of a once in a century pandemic and after staring down the greatest economic shock since the Great Depression.
“The Australian spirit has shone through,” Mr Frydenberg said, noting business big and small had kept the economy moving.
“We have come so far since the height of the pandemic,” he noted.
“We feared unemployment could reach 15 per cent and the economy would contract by more than 20 per cent. Today the reality is very different.”
Explaining employment was back to pre-pandemic levels, Mr Frydenberg said the current unemployment rate was 5.6 per cent, while the economy had contracted only 2.5 per cent, which was low by international standards.
Meanwhile, forecast economic growth for 2021 is 1.25 per cent and increases to 4.25 per cent in 2022.
However, he went on to note Australia’s good fortune had come at a considerable cost.
The budget deficit in 2021 is lower than expected but stands at $161 billion, and is projected to reduce to $57 billion by 2024/25.
“We are better placed than nearly any other country in the world to meet challenges that lie ahead,” Mr Frydenberg said, noting consumer sentiment and business confidence are currently at a high.
“Australia’s economic engine roaring back to life,” he claimed.
Real estate incentives
Mr Frydenberg saidthe construction industry was booming courtesy of initiatives like HomeBuilder.
“New house starts are at their highest levels in 20 years,” he said, while first home buyers are at their highest level in more than 12 years.
Further housing measures in this year’s budget include:
- The extension of the New Home Guarantee – which will help an additional 10,000 people purchase their first home with as little as a five per cent deposit.
- The Family Home Guarantee – which is targeted at single parents with dependents and allows them to purchase a home with as little as a 2 per cent deposit.
- Expansion of the First Home Super Saver Scheme – Which allows first home buyers to withdraw up to $50,000 from voluntary superannuation contributions to put towards a property (up from $30,000 previously).
“Home ownership will always be supported,” Mr Frydenberg stated.
In addition, the government will also allow people over 60 to channel up to $300,000 into their superannuation if it comes from the sale of a property where they have downsized. This is intended to free up housing stock.
Insurance and natural disasters
In welcome news for the nation’s northern residents, over $10 billion has been allocated to make insurance more affordable in northern Australia, while $600 million has been allocated to help households mitigate the impact of natural disasters across the country.
Infrastructure was also a major focus with the government committing $110 billion over 10-years, including $15 billion in additional infrastructure commitments.
- $2.6 billion for the North‑South Corridor in South Australia
- $2 billion for the Great Western Highway in New South Wales
- $2 billion initial investment for a new Melbourne Intermodal Terminal in Victoria
- $400 million for Bruce Highway Additional Funding in Queensland
- $379 million for METRONET in Western Australia
- $150 million for highway upgrades in the Northern Territory
- $132.5 million for Canberra Light Rail – Stage 2A in the Australian Capital Territory and
- $113.4 million for the Midland Highway Upgrades in Tasmania.
These commitments also include $1 billion for road safety upgrades and a further $1 billion for community infrastructure.
See the property industry’s response to the Budget so far here
Over 10 million low and middle-income earners will benefit from an additional tax cut, receiving up to $1080 for individuals and $2160 for couples.
Instant asset write offs
Mr Frydenberg noted eight out of 10 jobs are in the private sector.
The instant asset write-off has been extended until 2023, meaning “over 99 per cent of business can write off the full value of any eligible asset they purchase”.
Mr Frydenberg conceded some sectors and regions “continue to do it tough”. As a result, $2.1 billion has been allocated to aviation, tourism, the arts and education providers.
Small and family business
“Small and family business are the engine room of our economy, they are at the heart of every local community,” Mr Frydenberg said.
Small businesses will now have an ‘umpire’ to stand between them and the ATO when it comes to debt resolution.
This year’s budget has doubled the commitment to JobTrainer, providing $2.7 billion to fund 450,000 new training places and upskill job seekers.
Childcare received a mention in a budget with a focus on women’s welfare.
This year’s budget will see a further $1.7 billion invested in childcare to increase affordability for low and middle-income families. It will see 250,000 people better off by $2200 per year, Mr Frydenberg stated.
Building better regions
Stating regional Australia would “never be taken for granted”, Mr Frydenberg said funding has been set aside to support $250 million of regional projects.
Digital infrastructure and skills
Digital Infrastructure and skills were flagged as “critical for the competitiveness of the economy”.
As a result, $1.2 billion has been channelled into a digital economy strategy that includes a national network artificial intelligence centres and expanding the cyber security innovation fund.
There will be a focus on medical innovation as part of a $1.5 billion investment into expanding manufacturing, along with $2 billion in research and development incentives.
As part of an initiative to make Australia more attractive to the “world’s best and brightest”, there will be a move to streamline the visa process for highly-talented individuals.
Mr Frydenberg said this year’s budget would deliver record funding for essential services, including schools, hospitals, Medicare, mental health, aged care and disability services.
Additional funding has been directed to regional bulk billed services to ensure “quality medical services” for Australians no matter where they live.
A further $13.2 billion is to be released over four years to meet the needs of people with a disability, while $17.7 billion will be channelled into the aged care system to significantly improve it.
Meanwhile, there was a $2.3 billion commitment to mental health support and suicide prevention.
Domestic violence, sexual harassment, and women’s super
Over $1 billion is to be directed at women’s safety, including funding for domestic violence services in the form of emergency accommodation, counselling and cash payments for those escaping a threatening situation.
The laws around sexual harassment are to be strengthened via additional funding, while the government also acknowledged the fact women traditionally retire with less super than men.
As a result, they have removed the $450 income threshold for the super guarantee.
Meanwhile, border screening controls are to be strengthened to improve the nation’s security, $270 billion will be spent on defence capability, and the government is also set to upgrade recycling capabilities in a bid to reduce waste sent to landfill, while $1.6 billion has been allocated to fund priority technologies like clean hydrogen.