Master Builders Australia - Federal Budget Summary
The Federal Budget released last night has featured a number of important changes for the Building and Construction industry. Importantly, the Government has addressed a number of Master Builder's requests including:
- An increase in critical infrastructure funding of $24.5 billion to lift economic growth and boost the productivity and liveability of our cities
- Funding for planning and zoning reforms which the Government is pushing through new city deals
- Greater support for skills and training with an extra $250 million under the Skilling Australians Fund and
- Tax reform for small businesses and individuals through income tax cuts and an extension of the $20,000 small business instant asset write-off for one more year
Our industry was highlighted as a major driver of the recent improvement in the economy and the Budget bottom line since last year. The Budget is expected to reach a surplus one year earlier, with the net Budget position strengthened by around $15 billion over the forward estimates.
Across Master Builders' priority areas for reform the Budget will deliver:
- The National Housing Finance and Investment Corporation (NHFIC), which comprises of the $1 billion National Housing Infrastructure Facility and the Affordable Housing Bond Aggregator, is the centrepiece of the Governments housing affordability program and is on track to commence on 1 July 2018.
- The new National Housing and Homelessness Agreement will commence on 1 July 2018. This agreement will provide $7 billion in housing funding and an additional $620 million for homelessness services over the next 5 years. Adding to an existing commitment announced last year of $375 for frontline homelessness services.
- The Western Sydney City Deal also includes $15 million to support improvements in planning and zoning.
The 2018-19 Budget focusses on reducing the tax burden on small business by:
- A reduction in the personal income tax rate for middle and low income earners, which will reduce the tax burden on unincorporated entities.
- Extending the instant write off for equipment purchases of up to $20,000 for 12 months to 30 June 2019 for businesses with a turnover of less than $10 million.
- Increased the unincorporated small business tax discount rate from 5 per cent to 8 per cent. This rate will increase to 16 per cent by 2026-27.
- Extend the company tax cuts to 27.5 per cent to business with turnover of less than $50 million from 1 July 2018. To reduce the company tax rate for all businesses under the Ten Year Enterprise Tax Plan.
Jobs and Skills
- The Government will provide an additional $250 million in 2017 18 to fund a range of projects under the Skilling Australians Fund (the Fund) which provides support for apprenticeships and traineeships. The projects will support growth in trade and non trade apprenticeships and traineeships in target areas.
- State and Territory governments will be offered a new agreement which is estimated to provide $1.2 billion over the four years to 30 June 2022. This is based on current SAF levy revenue estimates plus total additional funding of $50 million per year over the four years.
- The Government will provide an additional $8.1 million over four years from 2018 19 (including $1.0 million in capital funding in 2018 19) to the Registered Organisations Commission (the Commission).
- The Government will provide additional funding of $1.4 million over five years from 2017 18 to the Office of the Commonwealth Ombudsman for oversight of the Australian Federal Police (AFP) and the Australian Building and Construction Commission (ABCC).
- The Government will provide total agency resourcing for the ABCC is $75.04 million in 2017-18 and $74.3 million in 2018-19.
- Of the $75 billion infrastructure funding and financing announced in the 2017-18 budget, $25 billion of this is expected to be committed in the forwards estimates.
- Funding for infrastructure projects has been announced for states and territories, including $100 million to upgrade the Barton Highway, and $100 million to update the Monaro Highway. Canberra hospitals will receive $403 million in funding and schools will receive $308 million in funding.
- The Budget includes continued funding for national partnership payments, which are essentially federal grants to the states/territories, the Government's focus going forward is on projects in which they can have an equity stake.
- Funding for critical infrastructure projects is also being tied in with City Deals to improve the productivity of regional cities.
- City Deals announced so far include for Launceston, Townsville, Western Sydney, Geelong and Hobart, with more likely to be signed off over the next 12 months.
Stopping short of wholesale tax reform, the Budget has some relatively big changes in the tax and transfer system, which are worth a mention. Key changes include:
- Tighter restrictions on cash payments, deductibility for business who do not meet their PAYG obligations and additional funding for the ATO for enforcement.
- Top up WA's share of GST by investing additional $188.9 million in WA's hospital infrastructure.
- Income tax cuts targeted at those earning $87,000 and less. Income tax cuts will start small, phased in over a decade and become more significant from 2022-23 onwards.
- Tax cuts for high income earners by 2024
- A scale-back of the R&D tax incentive to a cap of $2 or $4 million of refunds in each year, with a lifetime cap of $20 or $40 million, and R&D must be at least 1% of total annual expenditure.¬†
- Increase of low income tax offset - tax relief for 2018-19 by increasing the low-income tax offset to taxpayers earning up to $87,000.
- Abolished the 0.5 per cent increase in the Medical Levy
- The Government, under its 10 Year Enterprise Tax Plan remains committed to delivering company tax cuts for all businesses.
Master Builders ACT CEO
(02) 6175 5900.