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While some saw this as ‘the Budget we had to have’, the grants news is good. Overall funding for businesses is set to increase under measures proposed in the 2014 Federal Budget. GrantReady summarises what the Budget means for grants and funding programs.
Overall funding for businesses is set to increase under measures proposed in the 2014 Federal Budget. GrantReady summarises what the Budget means for grants and funding programs.
While some saw this as ‘the Budget we had to have’, the grants news is good. A general clean up, consolidation and raft of exciting new initiatives has been announced.
Funding programs have grown to 723 grant programs, with over $50 billion awarded annually. This budget has sought to remove some of the duplication by combining programs to achieve greater efficiency and reduced administrative cost. As a result the number of grant programs will now drop to about 700 programs. However, overall funding hasn’t been reduced; in fact, it will increase.
Two of these new consolidated programs will be the Entrepreneurs’ Infrastructure Programme and the Industry Skills Fund.
From January 2015, the Federal Government will replace a number of programs, including Commercialisation Australia, Enterprise Connect and the Textile, Clothing and Footwear programs. This will provide an investment of $484.2 million over five years; the cessation of eight programs will save $845.6 million.
The new program will provide services previously provided by the programs to be ceased, such as commercialisation of good ideas (currently the purview of Commercialisation Australia) and the facilitation of access to business management advice (an aspect of Enterprise Connect).
The establishment of the Industry Skills Fund will be delivered at a cost of $476 million to deliver 121,500 training places and 74,300 support services. This program will replace 10 different programs including the National Workplace Development Fund and Australian Apprenticeships Access Programme, which will save the budget $1.0 billion. The new Industry Skills Fund will require business to make a co-contribution towards the cost of the training based on the business size.
The surprise of the budget, this endowment will be worth $20 billion, paid for by savings in the health portfolio. From 2015-16, the net earnings from the Fund will serve as a permanent revenue stream, primarily to the National Health and Medical Research Council (NHMRC). The Fund will distribute around $1.0 billion a year into medical research from 2022-23.
With the government committing to reducing the rate of company tax by 1.5% to in part account for the Paid Parental Leave Scheme, it has made a similar reduction in the R&D Tax Incentive. Both the refundable and non-refundable rates of R&D Tax Incentive will be reduced by 1.5% effective from 1 July 2014.
This reduction will have a minimal impact on companies currently receiving the non-refundable tax credit due to the reduction in their overall company tax rate. However, for companies that currently access the refundable rate, that don’t pay tax and therefore can’t offset the reduction in R&D Tax Incentive benefit with the reduction in the company tax rate as a whole, this will mean a small but real reduction in their benefit.
The cessation of car manufacturing in Australia has brought about a number of changes in grants programs. The government has addressed this with a multi-part program under the banner of Growth Fund. The Federal Government will contribute $100.6 million to the $155 million Growth Fund that has contributions from both Victorian and South Australian State Governments and Holden and Toyota. This program will assist transition industry, businesses and individuals affected by the end of car manufacturing through five different programs.
With cessation of ARENA and environment related funding programs, $2.8 billion grant funding has been removed. However, with the introduction of the new Green Army Programme, the Reef 2050 Plan, Working on Country and Land Sector Package, Landcare Programme and Emissions Reduction Fund, the government has committed over $4.55 billion to the environment, through a range on initiatives that will likely involve major grant programs.
The Export Market Development Grant (EMDG) program received an extra $50 million. In addition, access is now easier with more grants on offer. Given our increasing number of free trade agreements, it’s difficult for government to support exporters since tariffs and other measures are gone, so EMDG is a key way the government can help.
Tourism Australia budget has been increased by an extra $50 million for a new grant scheme that helps small operators sell themselves in international markets.
The National Stronger Regions Fund will invest $200 million each year over five years in local capital works projects to improve local communities, for a total investment of $1 billion. From 2015, the fund will enable councils and community groups to apply for grants between $20,000 and $10 million, to meet half the cost of community building projects. Funding priority will be given to disadvantaged regions with a higher than average unemployment rate.
For more Federal Budget insight and analysis, visit NAB’s Federal Budget Hub.
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