economics | october 6 2020 australia’s 2020/21 budget€¦ · it is not to be construed as a...

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Economics | October 6 2020

Australia’s 2020/21 Budget

Page 21. Your Essential Guide

Page 3, 42. Analysis

Page 53. Economy

Page 64. Impact - Rates, $A, Shares

Page 75. Payments & Receipts

Page 86. Selected Charts

Pages 9-157. Budget Detail

October 6 2020 2

Economic Insights: Australia’s Budget 2020/21

Your essential guide to Federal Budget 2020/21:

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2. Analysis

Recovery from the pandemic recession The latest Federal Budget has a simple aim – to get the economy back on its feet. And at the heart of the strategy

is job creation. The aim is simple but achieving the goal will be much more difficult. And that is largely because there are host of factors outside our control.

The virus is hard to suppress. When you think you are on top of it, an outbreak flares up somewhere else. A vaccine would solve the issue, but there are no guarantees on the timing or effectiveness of a vaccine.

In the meantime, businesses must be supported so that people can return to work. And while support measures are important, they can’t stay in place for too long, otherwise businesses lose the entrepreneurial spirit and people lose the desire to work. Getting the balance right is the hard part. There will be stories of hardship from businesses and job seekers. On the other side of the equation there will be businesses and workers that are being super-compensated by support mechanisms. There are a range of measures in the budget, but the emphasis remains on them being targeted but temporary.

This is the biggest ever budget deficit in dollar terms. It is the biggest budget deficit as a proportion of GDP in 75 years since 1945. And the budget is unashamedly a stimulatory budget. But there is no alternative as Australia is in its deepest recession since at least World War II if not The Great Depression. Businesses and workers must be given a helping hand to get back on their feet.

The key measures The Government is proposing to bring forward legislated tax cuts. There are cash handouts for pensioners. The

previously-announced scale-back of job subsidy schemes will occur in early 2021. A new $1.2 billion plan to subsidise wages of apprentices Infrastructure spending features heavily. The JobMaker Plan totals $74 billion including a $4 billion hiring scheme. Business can expense assets and carry back losses. There is also a big focus on ‘digital’, whether it is e-invoicing or extension of telehealth. The Government proposes new investment in manufacturing to reduce the dependency on foreign suppliers in times when global borders are closed. And of course “shovel-ready” infrastructure spending is prominent.

Ticks and crosses Scatter-gun approach of stimulus. Raft of different stimulatory measures.

The ‘do all that it takes’ mantra.

The goal to increase domestic local capacity is a range of key industries.

Focus on jobs. Job security and creation inspire confidence and boosts spending.

Uncertainty about political support for tax measures in the Senate.

More urgency to address foreign border issue – need to foreign workers in key industries.

No consideration of voucher schemes that may better target consumer spending.

No guarantees that the stimulus will be spent. It could be saved.

Winners & Losers Normally a Federal Budget would have its stream of winners and losers. But not on this occasion. Economic

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recovery is the aim, and that requires lower taxes, increased spending, job training and re-skilling workers. There are few ‘losers’.

If there are ‘losers’, those on JobKeeper and JobSeeker will see payments scaled back over time. But that is because lockdown restrictions are easing, businesses are re-opening and workers are again needed.

Low and middle income taxpayers are ‘winners’ from tax cuts. If the tax cuts are spent as hoped, then consumer-facing businesses will emerge as ‘winners’.

Infrastructure spending lifts a lot of boats across the economy. And not just in construction and mining sectors but there are key benefits for support and service businesses in the towns and regions where the projects are located.

Looking ahead The term ‘agile’ gets thrown around a lot. But it is an important term. Governments must remain nimble in the

current COVID times. If suppression continues to work, then support schemes should be phased out. Fresh outbreaks must be contained and traced. And should that not occur, support mechanisms must be reinstated or tweaked.

Either way, ongoing support for the overseas-focussed component of the tourism industry may be required for some time.

There is no precise road-map, but the longer that the virus remains, the more we learn what works and what doesn’t.

While budget deficits must be reduced over time together with the resultant borrowings, that is for a later time. Australia’s government debt is still low on a global scale and servicing is manageable on super-low interest rates. The economic cost of doing less is higher unemployment and business insolvencies.

Tax cuts feature in the budget, and they have come in for some criticism. But people are losing sight of the overall strategy. That is to produce a flat personal tax system. The aim is to incentivise people to work harder, longer and smarter. The hope is that more Aussies seek to climb the ladder to more senior roles and higher incomes with the attraction of retaining more of the income from their harder efforts from the flat personal tax scales.

Admittedly, the Government should also be looking at all areas of the tax system, such as GST. A GST rate of 15 per cent and top rate personal tax scale of 25 cents in the dollar would be even more attractive in incentivising workers.

And perhaps a summit should be convened to address state payroll taxes – the bane of the business sector – along with stamp duty. Both should be included in the overdue reform of the tax system.

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3. Economy

A tricky time to make forecasts When an unexpected event like a virus outbreak occurs, and the last time that a similar event occurred was a

century ago, clearly it is hard to factor it into economic models. And certainly that’s what has happened with the global pandemic. Forecasts are made and then re-made to take into account new circumstances as they evolve.

The initial views of Federal Treasury were far more pessimistic in the dark days of March. Then there has been the success of suppression and then the setback of the second wave in Victoria. In recent days the situation has seemingly turned again for the better. But clearly Australia’s relatively ‘virus free’ regions are outperforming.

Forget about forecasts further out than one year. You would like to have a good guide to the future but so much can change in a short space of time. And then we have the US Election, potential ‘no deal’ Brexit, and angst of the Chinese Government with a raft of advanced Western nations.

After contacting 0.2 per cent in 2019/20, Federal Treasury expects a 1.5 per cent contraction in the current year. And then we get the bounce – growth of 4.75 per cent in 2021/22. Note that the budget assumes a vaccine will be rolled out in Australia in late 2021. And the jobless rate is estimated to peak at 7.25 per cent.

Commonwealth Bank group economists expect the economy to contract by 1.6 per cent this fiscal year (2020/21) and then rebound by 3.5 per cent in 2021/22. Inflation is expected to remain near 1.5 per cent through to mid-2022. The jobless rate may average 6.8 per cent in the current financial year before easing to 6.4 per cent next year.

CBA Group economists expect the global economy to contract by 3.6 per cent in calendar 2020 before rebounding 5 per cent in 2021. The IMF forecasts a 4.9 per cent contraction to be followed by a 5.4 per cent rebound.

One Treasury forecast worth focussing on is the estimate of nominal GDP – the assumption that is important for projected tax receipts. Treasury expects nominal GDP to fall by 1.75 per cent in 2020/21.

One key assumption used by Federal Treasury in budget forecasts is the iron ore price. And this has been notoriously difficult to forecast. In the July budget update, Treasury forecast the iron ore price to ease to US$55 a tonne. It has remained stubbornly high near US$115-125 a tonne thanks to Chinese stimulus.

Economic AssumptionsAndNext yearThis yearLast year

2022/232021/222020/212019/20

2.754.75-1.50-0.20Economic activity (% change)1.751.501.75-0.25Inflation (% change to June quarter)

2.001.501.251.75Wages (% change, year to June quarter)6.006.507.257.00Unemployment (%, June quarter)

Source: Budget papers, CommSec

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4. Impact – Interest rates, Currency & Shares

Interest rates The Reserve Bank has largely run out of conventional monetary policy options to further boost the economy.

Sure, the target rates for the cash rate and three-year government bond could be cut from 25 basis points (quarter of a per cent) to 10 basis points. More government bonds could be sold to pull down longer-term rates. Semi government bonds could be bought to support state government infrastructure programs. Or the Reserve Bank could adopt a policy of negative interest rates. But as the RBA Governor notes, the costs could exceed the benefits of such policies. And at present economic recovery is underway, supported by already super-stimulatory fiscal and monetary policy settings. So the economy is not crying out for further monetary policy measures.

The Reserve Bank Governor expects the cash and 3-year bond target rates to remain at current low levels for the next three years. In other words, a return to normality is expected to take some time.

Australian dollar The Federal Budget is stimulatory. The aim is to secure and sustain economic recovery. Of course there is only

so much the Government can do – or for the matter the Reserve Bank. The virus must be suppressed and that requires action by all Australians as well as new treatments for the virus and vaccine(s).

But Australia has achieved relative success in suppressing the virus. There has also been good progress with the second wave in Victoria. If the relative success continues that should translate to economic recovery and a firmer Aussie dollar. The Chinese economic recovery also provides support for the Aussie.

Further, CBA currency strategists assume stronger global economic growth in 2021 and that will likely feature the need for Australian raw materials in infrastructure spending plans by advanced economies.

So the Australian dollar is tipped to lift over the next year to US77 cents by June 2021.

Sharemarket implications A stimulatory Federal Budget is positive for the sharemarket. Tax cuts have the potential to boost consumer and

business spending. Tax cuts put extra dollars in people’s pockets but they also boost confidence levels. Of course a lot also depends on whether people have jobs, are confident about securing a job or holding on to existing jobs, and what happens with wages. Tax cuts can be spent as well as saved. If the tax cuts are spent, consumer discretionary stocks such as retailers – Harvey Norman, Premier Investments and JB Hi-Fi – will benefit.

The Government is committed to get people back to work. Government job subsidy programs, the boost to manufacturing and skills/apprenticeship programs are important here.

Interest rates will remain low for the next three years. That means the capital growth and dividend returns from listed shares will be important in attracting people to shares as an investment class.

The past reporting season showed that many companies trimmed dividends and boosted cash levels over the past six months. If those companies are more confident about the future they will again focus on capital spending, mergers & acquisitions and dividend payments to shareholders.

Mining and construction sectors will be supported by infrastructure spending, state & territory building incentives, low interest rates and global economic recovery. Adelaide Brighton, Lend Lease, Boral, Brickworks and BlueScope Steel could benefit.

The extension of the First Home Loan Deposit Scheme from October 6 to support the purchase or building of new homes could support shares of property developers and residential builders Stockland, Mirvac, Lendlease and James Hardie.

The outlook for migration remains uncertain. If foreign tourists, workers and students are blocked from entering Australia, recovery will be constrained for some sections of housing markets, airlines, overseas travel firms, casinos, education and labour-hire sectors.

And the lift in manufacturing spending on COVID-19 vaccines could boost the shares of CSL, Cochlear and Resmed.

The budget also provides $211 million for fuel security which could lift shares of Santos, Woodside, Senex and Ampol.

The ASX 200 is expected to lift to the 6,450-6,650 point range by June 2021.

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5. Outcomes, Payments & Revenues

October 6 2020 8


6. Selected Charts

October 6 2020 9


Appendix: The Budget Detail Fiscal Strategy & Outlook (Statement 3)

Receipts estimates Policy decisions Receipts are expected to fall from $463.8 billion (23.8 per cent of GDP) in 2020-21 to $451.9 billion (22.5 per cent

of GDP) in 2021-22, then increase across the forward estimates to $526.4 billion (23.9 per cent of GDP) in 2023-24.

Total receipts are expected to be $52.8 billion lower in 2020-21 than estimated at the 2019-20 Mid-Year Economic and Fiscal Outlook Statement (MYEFO), with tax receipts $55.2 billion lower and non-tax receipts $2.3 billion higher.

Policy decisions since the 2019-20 Mid-Year Economic and Fiscal Outlook Statement (MYEFO) are expected to reduce tax receipts by $13.5 billion in 2020-21 (including $8.6 billion since the July 2020 Economic and Fiscal Update (July Update)) and $56.5 billion over the four years to 2023-24. Measures include:

Temporary full expensing which allows businesses with aggregated annual turnover of less than $5 billion to deduct the full cost of eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 (Budget night) and first used or installed by 30 June 2022. This measure is estimated to decrease receipts by $26.7 billion over the forward estimates period.

Bringing forward the second stage of the Personal Income Tax Plan by two years to 1 July 2020 as well as a one-off additional benefit from the low and middle income tax offset (LMITO) in 2020-21. This measure is estimated to reduce receipts by $17.8 billion over the forward estimates period.

Allowing eligible companies to carry back tax losses from the 2019-20, 2020-21 and/or 2021-22 income years to offset previously taxed profits in 2018-19 or later income years, which is estimated to decrease receipts by $4.9 billion over the forward estimates period.

Since the 2019-20 MYEFO, parameter and other variations are expected to reduce tax receipts by $41.6 billion in 2020-21 and $227.0 billion over the four years to 2023-24.

Expected GST receipts have been revised down $21.1 billion over the four years to 2023-24 since the 2019-20 MYEFO. These revisions reflect lower forecasts for employment and average earnings, and corporate profits. Downward revisions to GST receipts reflect record falls in the consumption of services, with the components of discretionary consumption that are subject to GST particularly affected.

Payments Estimates Policy Decisions Payments are expected to increase to $677.4 billion (34.8 per cent of GDP) in 2020-21 from $549.6 billion (or

27.7 per cent of GDP) in 2019/20, and then decrease to $593.3 billion (26.9 per cent of GDP) in 2023-24. Payments as a proportion of GDP are expected to fall to 24.5 per cent by the end of the forward estimates, slightly lower than forecast at the 2018/19 MYEFO and remaining lower than the 30-year average of 24.7 per cent of GDP.

Reflecting the unprecedented levels of fiscal support, compared with the 2019-20 MYEFO, total nominal payments estimates are expected to increase by $166.9 billion in 2020-21 (including $37.4 billion since the July Update) and by $237.0 billion over the four years to 2023-24.

Due to the temporary and targeted nature of fiscal support measures, the payments-to-GDP ratio is expected to initially increase to 34.8 per cent in 2020-21, before decreasing to 26.9 per cent by 2023-24 as the economy grows more strongly as it recovers from the pandemic.

Policy decisions since the 2019-20 MYEFO have increased total cash payments by $148.0 billion in 2020-21 (including $34.2 billion since the July Update) and by $189.2 billion over the four years to 2023-24 (including $71.3 billion since the July Update). Measures include:

Amending the eligibility criteria for the JobKeeper Payment and reflecting the expected increased demand for the payment from businesses as a result of stricter COVID-19 restrictions in Victoria, which are expected to increase payments by $15.6 billion in 2020-21.

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The JobMaker Hiring Credit to accelerate employment growth by supporting organisations to take on additional employees through a hiring credit, which is expected to increase payments by $850.0 million in 2020-21 ($4.0 billion over the three years to 2022-23).

Providing eligible social welfare recipients, including pensioners, two separate $250 economic support payments, which are expected to increase payments by $2.5 billion in 2020-21 ($2.6 billion over the three years to 2022-23).

Funding to support the delivery of small scale road safety and upgrade projects to provide short term economic stimulus, which are expected to increase payments by $1.0 billion in 2020-21 ($2.0 billion over the two years to 2021-22).

Funding to further support older Australians accessing aged care by providing additional home care packages and continuing to improve transparency and regulatory standards, which are expected to increase payments by $705.0 million in 2020-21 ($2.0 billion over the four years to 2023-24).

Funding to support the Modern Manufacturing Strategy which is focused on building competitiveness, scale and resilience in the Australian manufacturing sector, which is expected to increase payments by $79.1 million in 2020-21 ($1.5 billion over the four years to 2023-24).

Parameter and other variations since the 2019-20 MYEFO have increased total cash payments by $18.9 billion in 2020-21 (including an increase of $3.2 billion since the July Update) and by $47.8 billion over the four years to 2023-24.

A large proportion of Government spending is adjusted for indexation each update based on economic parameters. As forecasts evolve, estimates of Government spending will change in line with updated economic forecasts. The increase in payments is primarily driven by the unprecedented economic impacts of the COVID-19 pandemic and include payments relating to:

The Job Seeker Income Support program, which are expected to increase by $12.3 billion in 2020-21 ($19.7 billion over the four years to 2023-24), largely reflecting an increase in the forecast recipient numbers due to the ongoing impact of the COVID-19 pandemic on the economy and employment levels.

Commonwealth Debt Management, which are expected to increase by $1.3 billion in 2020-21 ($10.9 billion over the four years to 2023-24), largely reflecting the higher servicing costs from increased levels of Australian Government Securities on issue.

The Economic Response to the Coronavirus program, which are expected to increase by $3.3 billion in 2020-21 ($4.1 billion over the four years to 2023-24), reflecting an increase in the forecast number of eligible businesses receiving support under the Cash Flow Boost for Employers.

The National Disability Insurance Scheme, which are expected to increase by $1.3 billion in 2020-21 ($3.9 billion over the four years to 2023-24), largely reflecting higher than expected average participant costs.

The Employment Services program, which are expected to increase by $486.6 million in 2020-21 ($2.6 billion over the four years to 2023-24), largely reflecting an increase in Jobactive expenditure as a result of the impact of the COVID-19 pandemic on employment levels.

Services Australia departmental funding, which are expected to increase by $498.2 million in 2020-21 ($1.1 billion over the four years to 2023-24), largely reflecting increased funding to support the delivery of new and existing Government support measures.

The Child Care Subsidy program, which are expected to increase by $228.4 million in 2020-21 ($860.1 million over the four years to 2023-24), largely reflecting increased support for families and demographic changes in the families accessing the program.

The Workplace Support program, which are expected to increase by $316.7 million in 2020-21 ($777.5 million over the four years to 2023-24), largely reflecting an increase in payments for employee entitlements under the Fair Entitlements Guarantee Act 2012 paid to employees who lost their job due to the liquidation or bankruptcy of their employer.

The Non-Government Schools National Support program, which are expected to increase by $101.8 million in 2020-21 ($762.9 million over the four years to 2023-24), largely reflecting higher than expected enrolments,

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including for indigenous students and students with a disability, and the opening of new non-government schools.

The Military Rehabilitation Compensation Acts — Income Support and Compensation program, which are expected to increase by $724.1 million in 2020-21 ($640.0 million over the four years to 2023-24), largely reflecting an increase in the number of claims being processed for members of the Australian Defence Force and veterans.

Major decreases in cash payments as a result of parameter and other variations since the 2019-20 MYEFO include payments relating to:

The provision of GST to the states and territories, which are expected to decrease by $11.8 billion in 2020-21 ($19.5 billion over the four years to 2023-24), consistent with a reduction in GST receipts.

The Income Support for Seniors program, which are expected to increase by $131.3 million in 2020-21 (and decrease by $4.8 billion over the four years to 2023-24), largely reflecting a lower than projected rate of indexation due to the impacts of the COVID-19 pandemic on the economy. As part of the COVID-19 Response Package, the Government has provided $5.0 billion in additional support to senior Australians through the provision of two separate $250 economic support payments to eligible pensioners as part of the Budget measure COVID-19 Response Package — further economic support and the two $750 economic support payments outlined in the July Update measure, COVID-19 Response Package — payments to support households.

The Fuel Tax Credits Scheme, which are expected to decrease by $65.0 million in 2020-21 ($1.3 billion over the four years to 2023-24), largely reflecting lower than expected usage of fuels that are eligible for the Fuel Tax Credits Scheme and a lower than projected rate of indexation due to the impacts of the COVID-19 pandemic on the economy.

The Private Health Insurance program, which are expected to increase by $8.2 million in 2020-21 (and decrease by $710.0 million over the four years to 2023-24), largely reflecting a lower than expected number of people taking out health insurance policies and uptake of lower cost policies.

Consistent with previous budgets, the underlying cash balance has been improved by the regular draw down of the conservative bias allowance.

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Budget Overview (Statement 1) The Government has unveiled a post-pandemic fiscal plan which is focused on pivoting the economy from

recession to rebuilding and recovery. The Government’s temporary but targeted “Economic Recovery Plan for Australia” increases its overall support to Aussie households and businesses to $507 billion with a job creation focus. Treasurer Josh Frydenberg said, “This budget is all about jobs.”

The Government’s fiscal position, with increased payments and decreased revenues as a result of COVID-19, has deteriorated significantly.

The underlying cash balance in 2020-21 is expected to be a deficit of $213.7 billion (or 11 per cent of GDP). The budget position is expected to improve across the forward estimates to a deficit of $66.9 billion in 2023-

24 and to further improve over the medium term to a deficit of $49.5 billion (or 1.6 per cent of GDP) in 2030-31.

Gross debt is expected to increase over the forward estimates before stabilising at around 55 per cent of GDP in the medium term.

Net debt is expected to peak at 43.8 per cent of GDP in the forward estimates (June 2024) and then fall to 39.6 per cent by the end of the medium term.

The size of bond market is expected to exceed $1 trillion beyond July 2021. The Government is providing $25 billion in further temporary and targeted support under the COVID-19 Response

Package and $74 billion under the JobMaker Plan. Key measures in the COVID-19 Response Package include:

$15.6 billion in additional spending on the JobKeeper Payment in light of the additional restrictions in place for Victoria and announced changes to eligibility.

$2.6 billion for two additional Economic Support Payments of $250 to pensioners and other eligible recipients. $1.7 billion to secure access to over 84.8 million doses of potential vaccine candidates developed by the

University of Oxford and the University of Queensland. The Government’s five-year JobMaker Plan focuses on driving sustainable, private sector-led growth and job

creation. Measures in this year’s Budget as part of the JobMaker Plan support aggregate demand, help businesses to create jobs and are focused on returning Australians to work. Major initiatives include:

More than $50 billion in tax relief to households and businesses over the forward estimates to create jobs. Increasing the Government’s infrastructure investment pipeline by $10 billion to $110 billion over ten years. $4 billion for a JobMaker Hiring Credit to give businesses incentives to take on additional employees that are

aged 16 to 35 years old. $1.2 billion to support 100,000 new apprentices and trainees with a 50 per cent wage subsidy. $240.4 million through the Women’s Economic Security Statement.

The Government is also continuing to guarantee the essential services on which Australians rely through the

Budget. Key measures include:

$1.6 billion for 23,000 additional home care packages. $798.8 million for the National Disability Insurance Agency and NDIS Quality and Safeguards Commission. Over $550 million for a package supporting regional Australia.

Since the onset of the COVID-19 pandemic, the Government’s economic support is expected to result in

economic activity being 4½ per cent higher by 2021-22 and the peak of the unemployment rate being lower by around 5 percentage points than what otherwise would have occurred. Without the Government’s economic support, the unemployment rate would have risen, and remained, above 12 per cent throughout 2020-21 and 2021-22.

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Summary of major spending initatitives by policy area

Taxation Personal income tax changes moved forward from 2022-23 to 2020-21, including an additional $1,080 (or

$2,160 couples and families) one-off extension of the low and middle income offset into 2020-21 tax year, at a total cost of $17.8 billion over the next four years.

Businesses with a turnover of less that $5 billion can deduct the full cost of new assets installed between 6 October 2020 and 30 June 2022, at a cost of $26.7 billion over four years.

The 'small business' definition will expand from $10 million to $50 million turnover per year from 1 July 2021, giving them access to previously announced small business benefits and tax incentives, at a total cost of $105 million over the next four years.

$2 billion in additional funding over the next four years to expand the Research and Development tax offset. 12 months “Jobmaker” payment to employers of $200 a week for hiring a new employee aged 16 to 29 or

$100 a week for a new employee aged 30 to 35, from 7 October 2020, at a cost of $4 billion over the next four years.

Healthcare

$47.3 million in additional mental health and crisis support funding for Victoria to manage the result of the COVID-19 pandemic, including $26.9 million to establish new 15 mental health clinics, $7 million for Beyond Blue, Lifeline and Kids Helpline, $5 million to support other digital and telephone services and $5 millon for headspace.

$100.8 million over the next two years to expand the Better Access mental health initiative to 10 services per calendar year.

$375.5 million over the next four years to include new and amend PBS listings for Ventolin, Keytruda, Calquence, Apomine and medicines treating hypertension.

$1.1 billion this year in additional funding for the partnership agreement to continue funding private hospital supplementing public hospital capacity and fund state hospitals.

$798.8 million in additional NDIS funding over the next four years. $1.1 billion this year for COVID-19 related healthcare, including $711.7 million to extend MBS item funding for

detection and $170.8 million to extend funding of dedicated COVID-19 clinics. Education & training

A billion-dollar JobTrainer fund will support up to 340,700 additional free or low-fee training places “in areas of genuine need”.

100,000 new apprentice and traineeships subsidised at 50 per cent of the wage, to a cap of $7,000 per quarter, at a cost of $1.2 billion over the next four years.

$263 million over the next four years for the VET system, including $91.6 million for a new data management system for apprenticeship administration, $52.3 million for foundational language, literacy and numeracy training, $75.9 million for the Department of Education, Skills and Employment, and $29.6 million for the National Careers Institute.

100,000 new apprentice and traineeships subsidised at 50 per cent of the wage, to a cap of $7,000 per quarter, at a cost of $1.2 billion over the next four years.

The government will provide $231 million over four years for the second Women’s Economic Security Package.

$39.6 million over the next two years to continue the Sporting Schools program. $39.8 million over the next four years for the Clontarf foundation to expand its education program for

Indigenous men. $32.8 million over the next four years for the Smith Family to support disadvantaged young Australians to

complete year 12. $27.3 million over the next five years to a suite of programs and organisations (including the Australian

Academy of Science, the Smith Family and Froebel Australia) supporting STEM skills. Research & development

$225.6 million over the next three years for the Bureau of Meteorology for asset maintenance to ensure emergency response.

$238.1 million over the next four years to support and maintain the Australia Nuclear Science and Technology Organisation facility’s operations, waste management and decommissioning activities. A scoping study will also be done by the Department of Finance on its governance and commercial arrangement.

$59.2 million over the next four years for the CSIRO to subsidise impacts of COVID-19 on its commercial activities.

October 6 2020 14


Immigration, defence, border & cyber security Temporary visa holders (prospective marriage, Pacific labour scheme or seasonal workers) affected by the

COVID travel ban will have fees waived (to return once travel restrictions have been lifted) or refunded, at a total cost of $275 million over the next four years

Increase in family migration visas to 77,300 places as a one-off in 2020-21, and a change to the priorities in skilled visa, to a total cost of $320 million over the next four years.

$55.6 million this year to re-open the North West Point Christmas Island facility to house people unable to be deported during COVID-19.

$17.7 million over the next four years to fund a Joint Transition Authority, which will support veterans as they move from ADF to civilian life.

An extra $201.5 million will be provided as part of the 2020 Cyber Security Strategy to create a more secure online world.

This includes $37 million to grow Australia’s cyber security skills and $128 million to counter cyber criminals. A further $450 million is being provided for law enforcement and intelligence agencies to keep Australians

safe from foreign and domestic threats.

Agriculture & Regional Australia Farmers and rural communities will benefit from $2 billion in funding over 10 years in improving water

infrastructure. $328.4 million over the next four years to increase agricultural export, including $222.2 million to modernise

assessment and certification IT systems and $35.2 million for regulatory reforms that will increase speed for exports to overseas markets.

$269.9 million over four years for a Murray-Darling Communities Investment package to extend the Murray-Darling Basin Economic Development Program, work with SA government to sustain the Riverland, fund community driven grants and $9.8 million per year in ongoing funding to ensure compliance and the establishment of an Inspector General’s office.

The government will spend $156 million over four years to help farmers recover and prepare for future droughts.

Housing

The Government is building on the success of the First Home Loan Deposit Scheme by extending the Scheme by a further 10,000 places that will allow first home buyers to obtain a loan to build a new dwelling or purchase a newly built dwelling with a deposit of as little as 5 per cent.

The Government is enabling the National Housing Finance and Investment Corporation to issue an additional $1 billion worth of bonds to attract institutional investment to increase the supply of affordable housing. These reforms complement the Government’s announced changes to Australia’s lending laws, which will support the flow of credit to housing, reducing the time and cost associated with accessing credit for consumers.

Environment & energy

Commonwealth National Parks will get their biggest single investment with an extra $233 million being provided to upgrade facilities in Uluru, Kakadu, Christmas Island and Booderee National Park.

In total an extra $1.8 billion is being provided to the environment including $67 million to restore mangroves, tidal marshes and sea grasses to help protect the health of Australia’s oceans.

Recycling will also get a $250 million boost for better infrastructure, in the hopes of stopping more than 600,000 tonnes of waste ending up in landfill and also creating 10,000 jobs.

There will also be $1.9 billion in new funding to support low emissions and renewable technologies, helping to lower emissions and address climate change.

The government will provide $52.9 million to support the gas industry and help unlock five key gas basins starting with the Beetaloo Basin in the Northern Territory, and the North Bowen and Galilee Basins in Queensland.

Reforms include creating an Australian Gas Hub with more competitive and transparent prices, delivering an efficient pipeline and transportation market, and empowering gas customers.

October 6 2020 15


Infrastructure (Statement 1, p17-18)

The Government is increasing spending on its record infrastructure pipeline from $100 billion to $110 billion over

the next 10 years with a COVID-19 infrastructure package that will provide significant near-term investments in major road and rail projects, road safety and community infrastructure. The Government will provide an additional $10 billion in funding towards projects over the next four years bringing total commitments for new and accelerated projects since the onset of the COVID-19 pandemic to $14 billion across the forward estimates.

Projects currently under construction are supporting around 100,000 direct and indirect jobs over their construction periods, with the Government’s additional investments since the onset of COVID-19 supporting a further 40,000 direct and indirect jobs.

Over the next two years, the Government will provide significant stimulus through the new “shovel ready” $2 billion Road Safety Program, and an additional $1 billion of funding for the recently established Local Roads and Community Infrastructure Program taking the size of the program to $1.5 billion.

These stimulus programs will support over 10,000 direct and indirect jobs across all states and territories with the funding to be made available under a ‘use it or lose it’ mechanism to incentivise states and territories to prioritise funding which can be delivered in the short term. The Road Safety Program will reallocate funding to those states and territories that have fully used their previous allocations while local governments under the Local Roads and Community Infrastructure Program will have until 31 December 2021 to spend their allocation. This will ensure the benefits of the economic stimulus are maximised.

The Government is making additional commitments for new projects in each of the states and territories including: $2.7 billion for New South Wales, including $603 million for the New England Highway Singleton Bypass and

Bolivia Hill Upgrade, and an additional $491 million for the Coffs Harbour Bypass $1.1 billion for Victoria, including $528 million for upgrades to the Shepparton and Warrnambool rail lines $1.3 billion for Queensland, including $750 million for Stage 1 of the Coomera Connector $1.1 billion for Western Australia, including $227 million for METRONET — High Capacity Signalling and

Morley Ellenbrook Line, and $87.5 million for Reid Highway Interchanges — West Swan Road $625 million for South Australia, including $200 million for the Hahndorf Township Improvements and Access

Upgrade, and $136 million to progress the Main South Road Duplication Stage 2 $360 million for Tasmania, including $65 million for the Tasman Bridge Upgrade $190 million for the Northern Territory, including $120 million for the Carpentaria Highway Upgrade, and

$46.6 million for National Network Highway Upgrades $155 million for the Australian Capital Territory, including $87.5 million for the Molonglo River Bridge.

City Deals with a total Commonwealth contribution of $7.6 billion are being delivered in Townsville, Launceston,

Western Sydney, Darwin, Hobart, Geelong and Adelaide. Building on this success, the Government is committing $328 million for a Perth City Deal that will support long-term growth by attracting people back into the city creating flow-on benefits for small business, including international students and tourism.

The Budget sees an extra $4.5 billion will be provided for the NBN, and another $29.2 million to fast-track the rollout of the 5G network.

economics | october 6 2020 australia’s 2020/21 budget€¦ · it is not to be construed as a...

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