2019 Federal Budget: “A boost to local business”
Just what did Australia think of the Federal Budget? From industry bodies to media, we count down 10 of the most interesting reactions.
On Tuesday night, the Australian Government handed down its 2019/20 Budget which, with an election looming in May, may or may not see the light of day.
In his reply, Opposition Leader Bill Shorten said Labor “won’t be signing up to the Liberals’ radical, right-wing, flat tax experiment… a scheme that would see a nurse on $50,000 paying the same tax rate as a surgeon on $200,000”. Shorten also described the government as “short-changing the National Disability Insurance Scheme by $1.6bn to prop up a flimsy Budget surplus forecast”.
As NAB Group Chief Economist Alan Oster noted: “This Budget needs to be seen in its political context. It’s more like an election manifesto than a traditional Budget and big questions remain around what parts, if any, will actually be implemented.”
Elsewhere, there have been a myriad responses to the Budget, with a wide cross-section of yea-sayers and nay-sayers. We turned to a number of industry sources and media to find out what they thought of the measures. Here are our top 10.
No. 10: “There is a cost to prioritising tax cuts over budget repair”
The Sydney Morning Herald highlights the tax cuts set to start in 2024 (when the 32.5 per cent tax rate for all income from $45,000 to $200,000 is cut to 30 per cent) as the “real dollar dazzler”. Senior Economics Writer Jessica Irvine points out that this exercise will be hugely expensive – $95 billion over six years, to be precise ($16 billion a year).
“The Coalition insists it has defeated the debt and deficits disaster,” Irvine writes, “projecting net debt – now at a whopping $374 billion – to fall to zero by 2029-30.
“One thing is for certain: we could get there a heck of a lot sooner without a whopping $300 billion in tax cuts over the coming decade.
“There is a cost to prioritising tax cuts over budget repair. And it’s future generations who pay it.”
No. 9: “Behind every number… is the unknown effect of the housing downturn”
The Property Council of Australia put something of a dampener on the federal government’s projected surplus, arguing the Budget and its growth projections were heavily reliant on Australia’s falling housing markets holding up.
“This is a Budget set for growth, but behind every number in the Budget is the unknown effect of the housing downturn,” CEO Ken Morrison said. “The headlines of surplus, infrastructure and tax relief are welcome, but falling house prices are clearly Treasury’s economic wildcard.”
He added: “The government and the parliament must have a laser-like focus on the housing sector and be ready with a contingency plan if these forecasts aren’t met.”
No. 8: “Australia’s hard-working GPs will be happy”
The Australian Medical Association (AMA) responded positively. “The Health Minister, Greg Hunt, has listened closely to the AMA and delivered a strong health Budget, with a particular emphasis on primary care, led by general practice,” said AMA President Dr Tony Bartone.
“Australia’s hard-working GPs will be happy to see a commitment of almost $1 billion to general practice. This includes matching Labor’s promise to bring forward by a year the lifting of the freeze on rebates for a range of Medicare GP items.”
The Pharmaceutical Society of Australia (PSA) welcomed the government’s extension of the AHI fee and reduced Pharmaceutical Benefits Scheme (PBS) wait times, and acknowledged the investment in primary care, aged care and mental health, and the importance of funding for those sectors.
PSA National President Dr Chris Freeman said the establishment of a new unit of clinical pharmacists within the Aged Care Quality and Safety Commission, that will work directly with residential aged care providers to educate them around best-practice use of medicines, will improve medicine safety across the country.
No. 7: “Well targeted”
Accounting body CPA Australia noted the Budget included many proposals that would have wide appeal to lots of voting Australians. Head of External Affairs Paul Drum said he was pleased for individuals and families. “The proposed income tax cuts are… well targeted and will ameliorate family financial pressures, and may also help stimulate consumption and savings.
“As most businesses are unincorporated,” he added, “personal tax cuts are also directly beneficial to business.”
No. 6: “Stark concerns for the science and technology sector”
Science & Technology Australia (STA), however, was less than impressed, releasing a statement that the Budget had “missed the opportunity” to invest in scientific research and institutions.
Professor Emma Johnston AO said the Budget was a mixed result for Australia’s science and technology-driven future.
“Cuts to CSIRO and a failure to keep pace with inflation for most national research agencies are stark concerns for the science and technology sector,” she said. “This has been coupled with reductions to the Research Support Program, which compound the cuts this program suffered in December – severely limiting our universities’ ability to conduct world-leading research and drive innovation.”
There were nevertheless positives, Johnston accepted. “It’s good to see the Australian Research Council and the National Health and Medical Research Council have been supported to meet the costs of inflation this year, something STA has called for over many years,” she said.
No. 5: “No indication of… the transformational role of technology in Australia’s future”
While start-up advocacy group StartupAUS welcomed the government’s injection of $60 million over three years into the Export Market Development Grant, it also saw the Budget as a “missed opportunity” – in this case to provide strategic vision on technology’s role in Australia’s economy.
CEO Alex McCauley said: “Tonight the Treasurer launched his Budget with a message of strong economic management but gave no indication of his government’s approach to the transformational role of technology in Australia’s economic future. The Treasurer chose to focus on the status quo rather than outline his government’s strategic plan for transitioning the Australian economy into an increasingly technology-led world.”
He also noted the government’s silence on the Research and Development Tax Incentive, which continues to leave technology businesses without stability.
No. 4: “A boost to local businesses”
Over at the Australian Retailers’ Association (ARA), the response was far more positive. Executive Director Russell Zimmerman said the Budget provided a welcome boost for a retail sector operating in challenging conditions.
“The government’s move to raise the tax offset for PAYG taxpayers, putting up to $1,080 in the pockets of singles and up to $2,160 for dual-income families – increasing actual purchasing power – means Australians can spend with confidence, delivering a boost to local businesses.”
Zimmerman was also pleased with the $525 million allocated to skills development. “Whilst the ARA would like to see more detail of the ‘10 new training hubs’ announced by the Treasurer, and how they might work as far as our industry is concerned, we welcome both the commitment to apprenticeships… and the $62 million earmarked for literacy, numeracy and digital skills development: all of which are critical to our members’ businesses.”
No. 3: “Both jobseekers and business will benefit”
The Australian Chamber of Commerce and Industry also welcomed the support for small business and skills announced by Josh Frydenberg.
“The government has heard our calls for greater investment in the skills needed by industry,” CEO James Pearson said. “Both jobseekers and business will benefit, including from the extra support directly to apprentices and the businesses that employ them.”
However, he noted that “on the downside, businesses who are desperate to fill vacancies so that they can keep meeting their customers’ needs, let alone grow and create more jobs, will be disappointed that the government has locked in cuts in permanent migration for the next four years. It ignores the evidence of the economic benefit of skilled migration and assumes Australia’s needs will be unchanged. This is despite the increasing cost to support our ageing population with healthcare and pensions in retirement, and the contribution young skilled migrants make to meeting those costs.”
No. 2: “A genuine attempt to reward farmers”
Over at the National Farmers Federation (NFF), the Budget was applauded. Among other things NFF President Fiona Simson noted the federal government’s $160 million for a fifth and sixth round of the Mobile Blackspots Program and $60 million to improve the NBN Sky Muster experience, saying that they would “go a long way to providing farmers and all regional Australians with equitable access to connectivity”.
Plus, “importantly, for the first time we’re seeing a genuine attempt to reward farmers for the environmental outcomes they deliver every day on behalf of all Australians – with a $34 million Agriculture Stewardship Package”.
No. 1: “Hopefully lift business sales and employment”
The Australian Industry Group CEO Innes Willox was also pleased. Speaking with Patricia Karvelas on RN Drive, he said: “We give the Budget a pretty good thumbs up. There are some very positive measures… particularly around projecting forward for tax cuts for small business, the instant asset write-off changes… the measures to allow businesses to promote exports for business are all very positive.”
In the AI Group’s official response to the Budget, Willox added that the Budget’s moves to lift household incomes were welcomed. “Lifting household disposable incomes by combining additional tax relief with the Energy Assistance Payment will quickly put welcome cash in families’ hands, which will flow through to consumer spending and hopefully lift business sales and employment.”