Federal Budget 2020
Treasurer Josh Frydenberg delivered his federal budget last night, revealing Australia is headed for a record debt level of nearly $1 trillion. Despite this, the budget was filled with billions of dollars of tax cuts, subsidies and other considerations designed to kick-start the economy and create jobs.
While there was little in there specifically to support the tourism sector, there were many elements that will support businesses generally to hopefully assist in our chances of survival.
Here’s a summary of the key highlights –
The Treasurer started by noting that, around the world, 600 million jobs have been lost to the coronavirus crisis with more than 1 million Australians having lost their jobs or seen their hours reduced to zero.
JobKeeper has been a vital component of supporting business through this crisis, representing an economic lifeline of over $101 billion to 3.5 million Australians. Cashflow Boost has also provided a pipeline of $28 billion to SMEs across the country.
These measures collectively saved some 700,000 jobs nationally.
This economic response has all come at a significant cost resulting in a $213.7 billion deficit in 2020-21, which is expected to halve next year and fall to $66.9 billion by 2023-24. Net debt will reach $703 billion in 2020-21 (representing 36% of GDP) and will peak at $966 billion by June 2024.
With this as the backdrop, the Treasurer noted there can be no economic recovery without a jobs recovery and the budget was designed with this in mind.
JobMaker Hiring Credit
The Government will introduce a new JobMaker hiring credit to support businesses hiring young Australians on JobSeeker between the ages of 16-35.
The program will see employers receive $200 a week for those aged between 16-29 and $100 a week to support the employment of workers between 30-35. All business except for the major banks will be eligible for this support.
The Government will also boost the $1 billion JobTrainer Fund, adding a further $1.2 billion to subsidise up to 50% of an apprentice’s wages for eligible businesses to a cap of $7,000 a quarter out to 30 September 2021. There will be 100,000 new apprenticeship places in this scheme.
Major Changes to the Tax System
The Treasurer announced the budget will bring forward $12.5 billion in planned tax cuts that will deliver over 11 million Australians a tax cut from 1 July 2020. This will be achieved through a variety of measures that include increasing the 19% threshold from $37,000 to $45,000, and the 32.5% threshold from $90,000 to $120,000.
Small businesses will also be able to take advantage of a 100% Instant Asset Write-off on the full value of any depreciable asset they purchase before 30 June 2022. 99% of businesses across Australia will be able to take advantage of this measure.
An estimated one million companies that record a loss up to the 2021-22 financial year will be able to offset these losses against profits claimed after 2018-19, which will generate a refund from the ATO. On this one, I do want to call out our VTIC member, Kiff Saunders, from Global Ballooning. Kiff raised with me the idea of back-casting losses this year against profits claimed in prior years. I brought this idea to the attention of the Treasurer’s Coronavirus Business Liaison Unit at a meeting back in June, so it’s great to see this included in enhancements to the tax system.
The Government announced $14 billion in new and accelerated infrastructure projects, which will include investment in upgrades to the Shepparton and Warrnambool rail lines.
$2 billion will be invested in road safety upgrades across the country on a ‘use it or lose it’ basis. An additional $1 billion in local council community upgrades also form part of this investment.
Relief and Recovery Fund
The Government will provide $129.9 million in 2020-21 to fund additional projects under the Relief and Recovery Fund (RRF) to support regions, communities and industry sectors that have disproportionately affected by COVID-19. This forms part of a suite of initiatives that include –
- $51 million invested in the Regional Tourism Recovery Initiative to support Australia’s most hard-hit tourism regions;
- $50 million business events grants program to get events, conferences and trade shows up and running again;
- $200 million for a new round of the Building Better Regions Fund, with $100 million specifically for tourism infrastructure to make our tourism regions more attractive and drive visitation;
- $231.6 million for Tourism Australia in 2020-21 to ramp-up domestic marketing campaigns and be strongly positioned to commence international marketing campaigns when the time is right;
- $319 million for Australia’s Commonwealth Parks and Heritage areas to enhance the visitor experience at these iconic sites and improve conservation outcomes.
- The Government will refund or waive the visa application charge (VAC) for temporary visa holders affected by the COVID-19 travel ban.
Next stop now will be the Victorian Government’s 2020-21 Budget which will be announced shortly. VTIC has already submitted to Government our Visitor Economy Recovery Plan calling for a $1.3 billion investment in our revival and recovery over the next 4 years. We will continue to prosecute this case and look forward to the State’s response to the Federal Budget in the coming weeks.
Chief Executive Officer