3 April 2019: BUDGET HIGHLIGHTS
- Revenue: $513.8 billion in 2019-20
- Expenditure: $500.9 billion in 2019-20
- Budget Position: $7.1 billion surplus in 2019-20
- Inflation: 2.25% in 2019-20
- Real GDP Growth: 0.4% in 2019-20
- Unemployment: 5% in 2019-20
- Wage growth: 2.5% in 2019-20
As a nervous first-time Treasurer with an election looming within weeks, Josh Frydenberg went into the chamber to deliver his first Budget knowing he would have to sing for his supper. And what a tune it was. It even had a catchy chorus – ‘without increasing taxes’ (or words to that effect), which surely will become the mantra during the upcoming election campaign.
Frydenberg opened with the big news – the Coalition has steered the economy ‘back in black, and back on track’ and is expected to deliver a surplus of $7.1 billion next financial year. While the central theme of the economy was true to the Coalition’s roots, Frydenberg’s address last night was marked by an emphasis on a different kind of audience – not for big business or the economists, or analysts, but one addressed specifically to Gloria, the nurse from Bankstown; or Jing, the teacher from Ballarat. It was a straight talking, plain spoken budget, designed to be parroted across media headlines and into the living rooms of the nation’s families.
With more than 700 measures in place, the Budget was designed to appeal to a very wide audience – small business owners, women and girls, Indigenous communities, people living with cancer and with mental illness, serving men and women, veterans, commuters, parents, teachers, nurses and tradies.
Frydenberg’s maiden Budget represents a marked difference from previous years of trickle-down economics to more of a “trickle-up” approach designed to drive consumer confidence (and spending) to give a kick to the economy.
The message to the electorate was strong: we know you’re doing it tough but stick with us and we’ll ease the load. At a time where Aussies are feeling the pinch of stagnant wages, soaring energy costs and down turn in the property market, Frydenberg’s Budget has funded carrots designed to appeal to every household. Most significant is the double down on the promise of last year’s tax cuts; Aussies with incomes of up to $126,000 will get a tax break that would see $1,080 more in the pocket each year, with the measure brought forward to July 2019 (oh so soon after the upcoming election), and a reduction of the 32.5% tax rate to just 30c on the dollar that is set to impact 4.5 million Aussies.
Significant investments were also announced across infrastructure (a $100 billion investment over a decade to ease congestion in the cities and invest in the bush), health ($435 billion over four years), education ($292 billion in total school funding over the next decade), climate change ($3.5 billion for the previously announced Climate Solutions Package), as well as nods to social affairs (funding for sport, domestic violence prevention, and carers).
It’s likely to be a furious 24 hours with the Coalition looking to pass some initiatives through the Parliament before the Senate sits for Estimates tomorrow, a showdown that will force Labor’s hand.
As the election campaign begins in earnest, the Coalition and Labor are preparing to fight it out on who can deliver similar messages and promises with credibility – who does the electorate trust, and who has delivered before. According to Frydenberg, the Coalition is the only one who can achieve a surplus, spend wisely to drive growth and not increase taxes: ‘Only one side of politics can do this, because only one side of politics has done this.’
It’s a Budget of big ambition and broad appeal but the question remains, is it enough to rally the voter base for the Coalition at the election?
Treasury and Finance
- Tax relief for low-and middle-income earners – up to $1,080 for single earners and $2,160 for dual income families in 2019 – while reducing the 32.5% tax bracket to 30% from 2024 ($158 billion over 10 years).
- Create an Emergency Response Fund to fund natural disaster response and recovery initiatives (an initial investment of $3.9 billion).
- Expand the ATO Tax Avoidance Taskforce’s terms of reference to crack down on tax advisors and intermediaries that promote tax avoidance (savings of $3.6 billion over four years).
- Deliver the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, including strengthening regulators ($606.7 million over five years).
- A one-off Energy Assistance Payment of $75 for singles and $130 for couples for 3.9 Australians who receive a number of government payments ($284.4 million over two years from 2018-19).
Industry, Innovation and Small Business
- Expand the instant asset write-off to businesses with up to $50 million turnover and an increase to the threshold from $25,000 to $30,000 ($400 million over five years).
- Cancel the Industry Growth Centres Initiative and Entrepreneurs Program (savings of $48.9 million over five years).
- Pilot a new Employment Services Model from 1 July 2019 to 30 June 2022 ($249.8 million over five years).
Education, Training and Youth
- Create a new National Skills Commission to drive reforms in the VET sector ($132.4 million over four years).
- A new Additional Identified Skills Shortage Payment to support up to 80,000 new apprentices ($200.2 million over five years).
- A trial of 10 national training hubs to support school-based vocational education in regions ($67.5 million over five years).
- Extend the funding for early childhood education to allow 15 hours of preschool for a further two years ($453.1 million over five years).
- Encourage more women into STEM education careers ($3.4 million over four years).
Environment and Climate Change
- Increased funding for the Climate Solutions Fund to enable practical emission reduction activities ($2 billion over 15 years).
- Deliver Snowy-Hydro 2.0 ($1.38 billion over six years).
- Invest in network infrastructure, dispatchable generation and reliable energy supplies in the National Electricity Market ($75.5 million over seven years).
- Establish the Energy Efficient Communities Program to provide grants to organisations to improve energy efficiency practices ($61.2 million over four years).
Infrastructure and Transport
- A 10-year, $100 billion infrastructure commitment across all states and territories.
- Fund the first phase of the Western Sydney North South Rail Link to the Western Sydney International Airport ($3.5 billion over five years).
- A top up for the Urban Congestion Fund to tackle local traffic bottlenecks, including $500 million for a National Commuter Car Park Fund ($3 billion over five years).
- Build a fast rail between Melbourne and Geelong to cut travel time in half ($2 billion over five years).
- Invest in road safety to reduce the road toll, including $1.1 billion for Roads to Recovery and $550 million for the Black Spot Program ($2.2 billion over five years).
- Implement the national action plan, Sport 2030, through the funding of a new sporting integrity body, international sporting events, athlete support and wellbeing and sporting infrastructure ($385.6 million over six years).
- Fund initiatives to reduce domestic and family violence against women and children, and Aboriginal and Torres Strait Islander peoples ($328 million over four years).
- Deliver the National Drug Strategy 2017-2026 ($337.2 million over five years).
Health and Ageing
- A ten-year investment plan for the MRFF ($5 billion over 10 years).
- Extend the Child Dental Benefits Schedule ($1.0 billion over three years).
- Improvements to the quality, safety and accessibility of residential and home care services including 10,000 new home care packages and an increase to the basic subsidy for residential aged care recipients ($724.8 million over five years).
- Fund a new chronic disease care funding model ($448.5 million over five years).
- New funding for headspace to improve access to youth mental health services ($263.3 million over seven years).
- Improve mental health services within the community, including eight new mental health centres ($229.9 million over seven years).
Defence and Home Affairs
- Investment in the operations of the Australian Federal Police and Australian Security Intelligence Organisation ($571.4 million over five years).
- Funding to support the National Drug Strategy 2017-2026 to prevent and minimise the harmful effects of drugs ($337.2 million over five years).
- Increasing the base visa application charge (VAC) by 5.4 per cent for all visa subclasses except the Visitor Visa (savings of $275 million over four years).
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