The Federal Government have delivered a budget which will leave workers behind and fails the jobs test by not saving existing jobs or creating secure new jobs nor ensuring the recovery is fairly shared. The budget projects high unemployment and stagnant wages for the foreseeable future despite 1 million Australians out of work now and another 1.5 million looking for more work. The Government has centred this budget around tax cuts which benefit wealthier Australians as well as tax handouts to corporations with cash to spare. These measures do nothing to assist the unemployed or people who are struggling on low incomes.

This budget says explicitly that Australia’s economic reconstruction after COVID-19 is to be trusted almost entirely to private business – helped along with generous tax cuts and business subsidies.

The need to strengthen public services (like health care, child care, and higher and vocational education) is largely ignored, as is the need to preserve and strengthen income security programs (with the phase-out of JobKeeper and cuts to JobSeeker going ahead).

The budget fails to include safeguards which ensure that government handouts to corporation are not used for rorts such as increases to executive pay or bonuses or payoffs to shareholders.  

The Government have failed women in this budget. Despite the outsized impact of the recession on women the Government are not investing in free childcare to give women the best chance to get back to work and are not investing in women-dominated industries.

The budget is a missed opportunity to invest in a better TAFE system or social housing, which would create more jobs and more opportunity.

This budget does nothing to deliver the confidence that working people need, confidence which comes from secure jobs and money in their pockets.

The big unknown tonight is if, in the coming weeks, the government is going to listen to some employer lobbyists and try and use IR changes to cut workers’ wages and conditions. This would destroy consumer confidence.

Significant measures by area

Jobs

- JobMaker Hiring Credit - payable for up to twelve months and immediately available to employers who hire those on JobSeeker aged 16-35 who were receiving JobSeeker, Youth Allowance or Parenting Payment prior to being employed. It will be paid at the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35. New hires must work for at least 20 hours a week. There is no requirement that the employee is engaged on a permanent basis, despite the payment being available for up to a year.

- JobKeeper Extension - JobKeeper will be extended to the March quarter in as announced on 7 August 2020.

- Stage 2 Tax Cuts Brought Forward - The Government is bringing forward stage 2 tax cuts backdated to 1 July 2020. The top threshold of the 19 per cent personal income tax bracket will increase from $37,000 to $45,000. The low-income tax offset (LITO) will increase from $445 to $700. The increased LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000. The LITO will then be withdrawn at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667. The top threshold of the 32.5 per cent personal income tax bracket will increase from $90,000 to $120,000.

- Increasing small business turnover threshold - Low-& Middle Income Tax Offset will be retained for the 2020-21 income year. The LMITO provides a reduction in tax of up to $1,080. It provides a reduction in tax of up to $255 for taxpayers with a taxable income of $37,000 or less. Between taxable incomes of $37,000 and $48,000, the value of the offset increases at a rate of 7.5 cents per dollar to the maximum offset of $1,080. Taxpayers with taxable incomes between $48,000 and $90,000 are eligible for the maximum offset of $1,080. The Government will increase the maximum threshold for small business entity turnover threshold for these concessions from $10 million to $50 million.

- ‘JobMaker’ Tax and depreciation support: - Research and Development Tax Incentive. For small companies, those with aggregated annual turnover of less than $20 million, the refundable R&D tax offset is being set at 18.5 percentage points above the claimant’s company tax rate, and the $4 million cap on annual cash refunds will not proceed. For larger companies, those with aggregated annual turnover of $20 million or more, the Government will reduce the number of intensity tiers from three to two.

- Temporary full expensing to support investment and jobs - Businesses with aggregated annual turnover of less than $5 billion by enabling them to deduct the full cost of eligible capital assets acquired from 7:30pm AEDT on 6October2020 (Budget night). Businesses with turnover up to $150m will be able to write-off second-hand assets.  Larger businesses than this will be able to write-off second-hand assets which cost less than $150,000.

Infrastructure

• Reconstruction Investment Projects - $10 billion on infrastructure over the forward estimates on top of their previously announced $100b over ten years plan.
• $6.7b to states for infrastructure investment on a use it or lose it basis.
• $2 billion investment in road safety upgrades over next two financial year.
• Investing an additional $1 billion to support local councils to immediately upgrade local roads, footpaths and street lighting over next two financial years.

Energy & Climate

• Gas-Fired Recovery - The Government will provide $52.9 million over four years from 2020-21 to support a gas-fired recovery and strengthen the economy by taking steps to unlock gas supply, deliver an efficient pipeline and transportation market, and empower gas customers. Includes:
• $28.3 million over three years from 2020-21 to establish five Strategic Basin Plans to accelerate gas development in priority geological basins.
• $13.7 million over four years from 2020-21 to continue the Commonwealth Scientific and Industrial Research Organisation’s Gas Industry Social and Environmental Research Alliance
• 10.9 million in 2020-21 to implement a sequenced plan to reset the East Coast gas market, including developing a National Gas Infrastructure Plan, work to establish Wallumbilla as the Australian Gas Hub, improving pipeline regulation and empowering gas customers.
• Improving energy affordability and reliability - $134.7 million over four years from 2020-21 to support investment in dispatchable generation and reliable energy supplies in the National Electricity Market (NEM) and the Wholesale Energy Market in Western Australia.
• Investment in new energy technologies - $1.9 billion over twelve years from 2020-21 (including $628.5 million over four years to 2023-24) to continue funding the Australian Renewable Energy Agency (ARENA), expand the investment mandate of the Clean Energy Finance Corporation (CEFC), and invest in low emissions technologies, network infrastructure, dispatchable generation and reliable supplies in the National Electricity Market (NEM). The measure includes:
• $1.4 billion over twelve years from 2020-21 (including $223.9 million over four years to 2023-24) to continue funding ARENA to provide research and development investment for emerging low emission technologies to increase their commercial readiness.
• $95.4 million over six years from 2020-21 (including $76.4 million over four years to 2023-24) to create a co-investment fund that supports industrial, freight and agricultural businesses to identify and adopt technologies to reduce emissions and increase productivity.
• $74.5 million over four years from 2020-21 to create the Future Fuels Fund, which would enable businesses to integrate new vehicle technologies, perform integration analysis and develop improved information on electric vehicles and charging infrastructure
• $67.1 million over six years from 2020-21 (including $53.9 million over four years to 2023-24) to expand the Regional and Remote Communities Reliability Fund to support pilot studies for microgrids in regional and remote areas
• $52.2 million over five years from 2020-21 (including $47.6 million over four years to 2023-24) to improve productivity and lower energy costs in the building and hotels sectors while stimulating the economy
• $70.2 million over five years from 2020-21 (including $55.7 million over four years to 2023-24) to support the development of a technology neutral regional hydrogen export hub to boost regional economies
• $50.0 million over three years from 2020-21 to establish the Commonwealth Carbon Capture Use and Storage Development Fund, for research into reducing the abatement of energy generators
• $25.3 million over four years from 2020-21 to improve energy and emissions data analytics, tools and reporting to better support the Government’s commitment to deliver affordable and reliable energy

Aged Care
Ageing and Aged Care Package - $2 billion over four years. Includes:

• $1.6 billion over four years from 2020-21 for the release of an additional 23,000 home care packages across all package levels.
• $125.3 million over three years from 2020-21 to replace the Commonwealth Continuity of Support Programme with a new Disability Support for Older Australians program to for older Australians with disability who were not eligible for the National Disability Insurance Scheme.
• $91.6 million over two years from 2020-21 to continue the reform to residential aged care funding including undertaking ‘shadow assessments’ using the Australian National Aged Care Classification
• $35.6 million over two years from 2020-21 to provide additional funding for the Business Improvement Fund to continue assisting eligible aged care providers to improve their financial operations
• $29.8 million over three years from 2021-22 to administer the new serious incident response scheme
• $26.9 million in 2020-21 to support the operation of the My Aged Care system
• $26.0 million in 2020-21 to maintain the capacity of the Aged Care Quality and Safety Commission in its ongoing regulation and compliance of the aged care sector
• $21.0 million over four years from 2020-21 to delay the implementation of payment in arrears and on invoice for home care services as well as provide transition support to providers to adjust to these arrangements

Other small measures.

• COVID-19 Response Aged Care - The Government will provide $746.3 million over four years from 2020-21 ($700.2 million including income tax revenue impacts) to support older Australians throughout the COVID-19 pandemic. Funding includes:
• $245.0 million in 2020-21 for a COVID supplement to assist all Commonwealth funded residential aged care providers and home care providers with the cost of operating during the COVID-19 pandemic.
• $205.1 million over two years from 2020-21 ($159.0 million including income tax revenue impacts) to support the direct care workforce through a third instalment of the workforce retention bonus and additional funding for the second instalment
• $103.4 million in 2020-21 to continue the COVID-19 aged care preparedness measure that supports aged care providers to manage and prevent outbreaks of COVID-19, including infection control. This includes a number of measures to directly support the aged care workforce
• $92.4 million in 2020-21 to expand support under the Supporting Aged Care Workers in COVID-19 Grant Opportunity for aged care providers in designated COVID-19 ‘hotspots’
• $71.4 million in 2020-21 to support residents of aged care facilities who temporarily leave care to live with their families

Skills/Education

• Apprentice Wage Subsidy - $1.2 billion to support up to 100,000 new apprentices and trainees by paying a 50 per cent wage subsidy, up to a cap of $7,000 per quarter, for commencing apprentices and trainees. Program applies to all new apprentices and trainees across all industries but will end in 12 months.

Skills Reform Package

• $91.6 million over four years from 2020-21 (and $1.8 million per year ongoing) for a new Apprenticeships Data Management System to better support Government service delivery through the operation of the Australian Apprenticeship Support Network and administration of apprenticeship programs.
• $52.3 million over three years from 2020-21 to expand the Skills for Education and Employment program to support additional places for basic foundational language, literacy and numeracy skills training.
• $29.6 million over four years from 2020-21 to support the ongoing role of the National Careers Institute to simplify and strengthen career information, promote VET pathways, and enhance partnerships between industry, employers, schools and tertiary providers.
• $75.9 million over four years from 2020-21 in additional resourcing for the Department of Education, Skills and Employment to support the implementation of the Skills Reform Package.     

Fringe Benefits for Training -  Government will forgo $9 million over four years to exempt business from the 47 per cent fringe benefits tax (FBT) for employer‑provided retraining activities to employees who are redeployed to a different role in the business.

Schools - Schools have been largely left out of consideration with the exception of a small token program ($146 million Students Support Package) to deal with impact on disadvantaged students across all schools.
Additional support for students and education providers: (part of the Job Ready Graduates Reforms)

• $251.8 million over two years from 2020-21 for an additional 50,000 subsidised higher education short course places across a range of discipline areas
• $298.5 million over four years from 2020-21 for an additional 12,000 Commonwealth supported places in 2021 in national priority areas to further meet demand for higher education
• $19.2 million over four years from 2020-21 (and $45.1 million over ten years to 2029-30) to revise the allocation method for the $5,000 Tertiary Access Payment and to enable universities to administer the payment to eligible outer regional, rural and remote commencing students who re-locate for their studies.

JobMaker Plan Research Package - an additional $1.0 billion in 2020-21 through the Research Support Program to support universities’ costs of research and continued delivery of world class research

Young Australians to Undertake Seasonal Work to get Youth Allowance - $16.3 million to incentivise young people to undertake seasonal agricultural work. From 1 December 2020, those who earn at least $15,000 in the agricultural industry between 30 November 2020 and 31 December 2021 would be automatically assessed as meeting independence requirements to be eligible for Youth Allowance.

Childcare

• COVID-19 Response Package — child care — Victorian recovery payments and other support measures
• $269.0 million in recovery payments of 25 per cent pre-COVID revenue for all Victorian ECEC services (except Outside School Hours Care (OSHC) and Vacation Care services)
• $8.6 million for existing support arrangements for Victorian OSHC and Vacation Care services to be extended until school returns to normal
• $36.6 million in recovery payments of 40 per cent of pre-COVID revenue for Victorian OSHC and Vacation Care services after school returns to normal, with Vacation Care services to receive payments for the number of weeks they operate over the period.

Health

• Mental Health - $5.7bn investment in Mental Health
• Double access to Medicare subsided GP referred psych support through Mental Health Plans – from 10 to 20 visits now funded.
• Increasing investment in Headspace – increasing number of agencies
• $76m investment in mental health (telehealth) for bushfire trauma recovery
• $47.3 million for an Investment in mental health specific to Victorian people
• $102m over 4 years for Veterans mental health.
• Access to COVID-19 vaccines and consumables - $1.7 billion over two years for agreements to access the University of Oxford/AstraZeneca vaccine and the University of Queensland/CSL Limited vaccine with local manufacturing provided by CSL Limited/Seqirus Australia. A further $24.7 million will be provided for the supply and storage of vital consumables, such as needles and syringes, to ensure vaccines can be administered once available.
• Guaranteeing Medicare and access to medicines — extension. The Government will provide an additional $1.1 billion in 2020-21 to support access to health care services and reduce the risk of community transmission of COVID-19, including:
• $711.7 million to extend temporary Medicare Benefits Schedule (MBS) pathology items for the detection of COVID-19, including testing for asymptomatic interstate freight workers and aged care workers
• $170.8 million to extend dedicated respiratory clinics to manage and diagnose COVID-19 cases to take pressure off hospitals
• $111.6 million for the extension of temporary COVID-19 telehealth services.  
• $42.0 million for rapid specimen collection and testing of COVID-19 in aged care facilities

Welfare

• $250 payment - $2.6 billion for 2 additional $250 support payments to aged pensioners and other eligible recipients.
• Barriers to access payments - Requirements for Youth Allowance and Abstudy to be reduced. Barriers to PPL for parents whose PPL has been disrupted by COVID lowered.
• $62.8 million over two years from 2020-21 to establish a Local Jobs Program to coordinate employment and training solutions at a local level in 25 regions across Australia
• Cashless Welfare Card - The Government will continue to fund the ongoing implementation of the cashless welfare card, and the transition participants from Income Management to CDC in the Northern Territory and Cape York.

Super
The Government has signalled its legislative priorities for superannuation which will revolve around:

• Default – The Government will partially accept the recommendations of the Productivity Commission’s inquiry into an alternative default system and will implement ‘stapling’ of members to their current or first superannuation fund. Members will not default into their workplace nominated default if they already have a superannuation fund.
• Choice – The Government will create an online platform through the Australian Taxation Office which offers comparisons between MySuper products to encourage members to switch and select their stapled default fund. Choice products will be added to these dashboards from 2022.
• Performance – The Government is proposing to prevent the entry of new members to funds which underperform an APRA-created test for two consecutive years. Funds will be required to outperform a minimum benchmark over one full year in order to regain the ability to acquire new members.
• Sole Purpose – The Government has proposed, but without detail, a more stringent Sole Purpose Test which ‘ensure trustees only act in the best financial interests of members.’ This policy may impact funds’ ability to advocate on behalf of members, engage with companies on ESG issues, advertise, or enter into commercial agreements. This will be paired with increase disclosure requirements of expenditure to members at Annual General Meetings.

The Government has allocated $159.6 million over four years to implement these measures, beginning 2020-21.

NDIS

• $92.9m to the NDIS Quality and Safeguards Commission - to improve provider compliance with quality and safety of supports for people with a disability.
• $800 million to implement Tune report and provide funding - funds Commonwealth Quality and Safeguards Commission and NDIA to deliver safer disability services for people living with disability

Manufacturing
Modern Manufacturing - Repeat of last week’s $1.5 billion investment.

Regional Australia
Supporting Regional Australia Package

• $207.7 million over five years from 2020-21 (including $0.5 million in 2024-25) for round five of the Building Better Regions Fund to support investment in community infrastructure and capacity building projects in regional areas, including $100.0 million for tourism-related infrastructure projects
• $100.0 million over two years from 2020-21 to facilitate Regional Recovery Partnerships with states, territories and local governments to support recovery and growth in 10 priority investment regions
• $51.0 million over two years from 2020-21 to assist regions heavily reliant on international tourism by stimulating tourism business recovery and tourism job retention and creation in regional Australia.
• $50.3 million over four years from 2020-21 (and $11.0 million per year ongoing) for capital works and expansion of the Rural Health Multidisciplinary Training (RHMT) program to improve training for students across a range of health disciplines
• $41.0 million over three years from 2020-21 to establish the Securing Raw Materials Program and the Regional Cooperative Research Centres Project to support research and development activities in regional areas
• $30.3 million over two years from 2020-21 to extend Round One of the Regional Connectivity Program to support the delivery of reliable, affordable and innovative digital services and technologies in regional Australia

Public Sector
Staffing Levels - In 2020-21, staffing levels have increased beyond 2006-07 staffing cap levels as the Government implements the COVID-19 Economic Recovery Plan and delivers essential services to all Australians. The staffing level increases are only temporary with expectations of a decline in funding for public service and public sector employment from 2021-22.
Significant ASL increases will occur in a number of portfolios in 2020-21 including Services Australia, Treasury and Infrastructure.
Additional funding for the Civil Aviation Safety Authority, Commonwealth Scientific and Industrial Research Organisation and a range of arts and cultural institutions due to COVID-19 impact on external funding sources