Federal Budget 2020-2021

The Federal Budget was handed down by Treasurer Josh Frydenberg on 6 October 2020, after it was postponed from May due to the coronavirus pandemic. Overview The deficit is projected to reach $213.7 billion in the 2020-21 financial year, or around 11 per cent of GDP. Deficits are forecast for the next decade. Net debt will increase to $703 billion, around 36 per cent of GDP, and is expected to peak at $966 billion, or 44 per cent of GDP, in 2024. Gross debt will peak at over $1.1 trillion in 2023-24. Treasury expects unemployment will reach 8 per cent before the end of the year, and the Budget forecasts the economy will grow by 4.25 per cent next calendar year. The economy contracted 7 per cent in the June quarter. Macroeconomic figures in the Budget are based on the assumption that a “population wide” vaccine will be “fully in place” by late 2021. Infrastructure • The Budget includes an extra $14 billion in new infrastructure funding, bringing the 10- year infrastructure pipeline to $110 billion. The funding will be provided on a ‘use it or lose it’ basis, where the state must start work quickly or the Federal Government will give it to another state • $2 billion in road safety upgrades, such as road widening, centre lines and barriers, which will be identified and delivered in three six-month tranches • $1 billion to support local councils to immediately upgrade local roads, footpaths and street lighting, as an extension of the Local Roads and Community Infrastructure program • $36.9 million over 4 years from 2020-21, and a further $25.2 million over the 2 years to 2025-26, to extend the Northern Infrastructure Facility’s investment window by 5 years from 30 June 2021 to 30 June 2026, and to expand its lending remit and processes • $2 billion for projects through the National Water Infrastructure Development Fund, to deliver increased water security and grow the agricultural sector • projects contained in the Budget include: • $603 million for the New England Highway - Singleton Bypass and Bolivia Hill Upgrade • $591.7 million for the Newell Highway Upgrade, including Dubbo Bridge, Parkes Bypass, heavy duty pavement upgrades and overtaking lanes • $490.6 million for the Coffs Harbour Bypass • $1.8 billion for the Metro - Western Sydney Airport rail project • $360 million for the Newcastle Inner City Bypass, Rankin Park to Jesmond • $150 million for grade separating road interfaces • $120 million for the Prospect Highway Upgrade • $94 million for the Heathcote Road Upgrade, Hammondville to Voyager Point. • $63.5 million for the Dunheved Road Upgrade, Penrith • $60 million for the M1 North Smart Motorway — ANZAC Bridge to Warringah Freeway • $46.4 million for the Mulgoa Road Upgrade • $40.6 million over four years to improve Sydney Harbour Federation Trust sites • Victorian projects include: • $320 million for the Shepparton Rail Line Upgrade • $292 million for Barwon Heads Road • $208 million for the Warrnambool Rail Upgrade - Stage 2 • $104 million for the McKoy Street - Hume Freeway Intersection Upgrade • $84.5 million for Hall Road • $31 million for Narre Warren North Road • $30 million for the Western Rail Plan • $27.2 million for the Western Port Highway • $22.5 million for South Road. • Victorian projects to be brought forward: • $605 million for the South Geelong to Waurn Ponds Rail Upgrade — Stages 2 and 3 • $5.0 million for the Outer Metropolitan Ring / E6 Corridor Preservation • projects include: • $750 million for Stage 1 of the Coomera Connector (Coomera to Nerang) • $201.2 million for the including, Caloundra Road to Sunshine Motorway, Rockhampton Northern Access Upgrade, Burdekin Bridge Upgrade, Babinda Intersection Upgrade, Cairns Southern Access Corridor - Stage 4 - Kate to Aumuller and Bruce Highway Upgrade Strategy • $112 million for the Centenary Bridge Upgrade • $76 million for the Riverway Drive Stage 2 (Allambie Lane - Dunlop Street) • $50 million for the Beams Road Open Level Crossing Upgrade • $42.4 million for the Mount Lindesay Highway Upgrade (Johanna Street to South Street) • $38 million for the Cooktown to Weipa Corridor Upgrade — Cape York Community Access Roads • $17.2 million for the Cairns to Northern Territory Border Upgrade — Gulf Developmental Road — Pavement Strengthening and Widening • $10 million for the M1 Pacific Motorway Upgrade Program — Exit 45 • Queensland projects to be brought forward include • $10 million for the Port of further planning • $4.2 million for the Brisbane to Gold Coast Faster Rail Business Case • Western Australia projects include: • $227.1 million for Metronet - High Capacity Signalling and Morley-Ellenbrook Line • $87.5 million for the Reid Highway Interchanges - West Swan Road • $80 million for the Wheatbelt Secondary Freight Network • $75 million for the Canning Bridge Bus Interchange • $70 million for the Roe Highway Widening and Abernethy Road Upgrade • $70 million for the Newman to Katherine Corridor Upgrade - Broome to Kununurra, Stage 3 of the Ord River North and Port Hedland Airport Deviation • $56 million for the Karratha to Tom Price Corridor Upgrade • $48.6 million for the Kwinana and Mitchell Freeway — barrier upgrades, widening and introduction of Intelligent Transport Systems • $45.0 million for the Stirling Bus Interchange • $41.6 million for the Port Augusta to Perth Corridor — Coolgardie to Esperance Highway — Emu Rocks • $40.0 million for the Freight Vehicle Productivity Improvements Program • $17.5 million for the Bus Lane Program — Stirling and Canning Highways (Crawley and Applecross) • $327.5 million to support projects under the new Perth City Deal that will focus on reactivating and revitalising the Perth CBD • Western Australia projects to be brought forward: • $115.8 million for the Roe Highway-Great Eastern Highway Bypass and Abernethy Road-Great Eastern Highway Bypass Interchanges • $24 million for the Freemantle Traffic Bridge (Swan River Crossing) • $21.6 million for the Wheatbelt Secondary Freight Network • South Australian projects include: • $200 million for the Hahndorf Township Improvements and Access Upgrade • $136 million for the Princes Highway Corridor — intersection improvements, overtaking lanes, pavement works, rest areas, safety and signage improvements and shoulder sealing • $136 million for the Main South Road Duplication Stage 2 — Aldinga to Sellicks Beach • $100 million for the Strzelecki Track Upgrade • $28 million for the South Eastern Freeway Safety Upgrade • $13.2 million for the Goodwood and Torrens Junctions • $12 million for the Victor Harbor Road Upgrade • Tasmania projects include: • $150 million for the Hobart to Sorell Corridor — Midway Point Causeway (including McGees Bridge) and Sorell Causeway • $72 million for the Tasman Roads Package — Bass Highway Upgrades (between Deloraine and Devonport), West Tamar Highway Upgrades (between Exeter and Launceston) and Bridport Road Freight Efficiency and Safety Upgrades • $65 million for the Tasman Bridge Upgrade • $52 million for the Midland Highway Upgrade — Future Priorities • $12 million for freight bridge upgrades • ACT projects include: • $87.5 million for the Molonglo River Bridge • $50 million for the Canberra — Southwest Corridor Upgrade package • $15.3 million for the Monaro Highway Upgrade package • $2.5 million for the Parkes Way Upgrade planning and design • Northern Territory projects include: • $120 million for the Carpentaria Highway Upgrade • $46.6 million for the Northern Territory National Network Highway Upgrades • $22.9 million for the Stuart Highway Upgrade at Coolalinga Infrastructure • $1.5 billion has been allocated over 4 years to boost local manufacturing. The Government has identified 6 key priority manufacturing sectors: resources technology and critical minerals processing, food and beverages, medical products, recycling and clean energy, defence and space, including: • $1.3 billion for a Modern Manufacturing Initiative to offer grants on major projects for manufacturers scale up and create jobs • $52.8 million added to the Manufacturing Modernisation Fund announced in last year’s Budget • An additional $50 million will be provided to the existing Industry Growth Centres initiative until the end of June 2022 Energy, resources and emissions reduction • $1.4 billion in over 12 years funding to support low emissions and renewable technologies for Australian Renewable Energy Agency (ARENA) • $95.4 to establish a co-investment fund to assist emission reduction and productivity for freight, agriculture and industrial businesses over the next six years • $74.5 million to establish a Future Fuels Fund • $53.6 million to extend the Regional and Remote Communities Reliability Fund exploring pilot microgrids • $70.2 million for the development of a technology-neutral hydrogen export hub in regional Australia • $50.0 million to establish a Commonwealth Carbon Capture Use and Storage Development Fund for research into emission abatement in energy generation Tax • The Budget provides for $17.8 billion in income tax cuts, including $12.5 billion over the next 12 months • Stages 2 and 3 of already-legislated tax cuts will be brought forward from their legislated start dates of 1 July 2022 and 1 July 2024, with stage 2 to be backdated to 1 July this year. From 1 July 2020: • The low income tax offset will increase from $445 to $700 • The top threshold of the 19 per cent tax bracket will increase from $37,000 to $45,000 • The top threshold of the 32.5 per cent tax bracket will increase from $90,000 to $120,000 • Low and middle income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset in 2020-21 • The income tax cuts will reportedly be presented to the Senate as a single, unalterable package • Businesses with a turnover of up to $5 billion will be able to immediately deduct the full cost of eligible depreciable assets acquired from 7:30pm on 6 October 2020 and first used or installed by 30 June 2022 • Companies with a turnover of up to $5 billion will temporarily be allowed to offset tax losses against previous profits on which tax has been paid. Losses incurred to June 2022 can be offset against prior profits made in or after the 2018-19 financial year • An exemption from Fringe Benefits Tax for employer-provided retraining and reskilling for employees who are redeployed to a different role in the business, which will cost $7 million • $105 billion for businesses with an aggregated annual turnover of $10-50 million to gain access to up to 10 small business tax concessions • Eligible businesses can start deducting certain start-up expenses and certain prepaid expenditure from 1 July 2020 • Eligible businesses will be exempt from the 47 per cent fringe benefits tax on car parking and multiple work-related devices such as phones or laptops provided to employees from 1 April 2021 • Eligible businesses will be able to access simplified trading stock rules, remit pay as you go instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods from 1 July 2021 • Eligible businesses will also have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021 • The Commissioner of Taxation will allow a simplified GST accounting method to be used by businesses below the $50 million threshold from 1 July 2021 • $2 billion through the Research and Development Tax Incentive COVID-19 assistance • Recipients of aged, family and disability welfare payments will receive an extra $500 in cash payments, delivered as $250 in December, and $250 in March 2021 • The JobMaker Hiring Credit wage subsidy will be available for up to 12 months for hiring a young person on welfare under the age of 35, at a cost of $4 billion. $200 per week per for employees aged 16-29 will be paid quarterly, and $100 per week for those 30- 35. Eligible employees are required to work at least 20 hours per week • JobKeeper was expanded by $15.6 billion, as announced in August • The JobMaker digital plan includes $1.67 billion on cybersecurity and a $3.5 billion further investment in the NBN • The $680 million HomeBuilder scheme providing grants to build a new home or substantially renovate an existing home • More than $2 billion to extend a range of COVID-19 health measures for a further six months, to 31 March 2021. Medicare-subsidised telehealth and pathology services, GP- led respiratory clinics, home medicines delivery, public and private hospital services will all be extended, as well as further investments in PPE Superannuation • $160 million for the Your Future, Your Super package, commencing on 1 July 2021, aims to improve the superannuation system by: • An existing super account will be “stapled” to a customer to avoid the creation of unwanted multiple accounts • Making it easier to choose a better fund by providing an online comparison tool • Making funds meet an annual performance test. Those that fail will have to inform members, and consistently underperforming products will be prevented from taking on new customers • Strengthening obligations on trustees to only act in the best interests of members, and requiring funds provide more information to members • The ATO will develop systems allowing employees to select from a table of MySuper products through the YourSuper portal Digital business plan • $800 million to enable businesses to take advantage of digital technologies to grow post-COVID. This includes: • $256.6 million to develop a digital identity system to enable more secure and convenient use of government services and in future private sector services • $419.9 million to enable the full implementation of the Modernising Business Registers program, which will allow businesses to quickly view, update and maintain their business registry data in one location • An additional $28.5 million to support the implementation of the Consumer Data Right to the banking and energy sectors • $29.2 million to accelerate the roll-out of 5G technology, including investments in 5G commercial trials and testbeds in key industry sectors such as agriculture, mining, logistics and manufacturing • $22.2 million to support small business operators to take up digital technologies through an expansion of the Australian Small Business Advisory Service – Digital Solutions program, a Digital Readiness Assessment tool and a Digital Directors training package • $11.2 million for a new regulatory technology commercialisation initiative to improve compliance and directly support digital technology companies • $9.6 million to support fintech companies to export financial services and attract investment • $6.9 million for two blockchain pilots aimed at reducing business compliance costs • $5.9 million to increase Australia’s influence in international standards setting • $3.6 million towards mandating the adoption of electronic invoicing by 1 July 2022 for all Commonwealth government agencies to encourage greater adoption amongst businesses supplying to government, and for consultation on options for mandatory adoption of e-invoicing by businesses • $2.5 million to connect workers and small and medium-sized sized businesses to digital skills training Health • $94.3 million to improve care and mental health outcomes for older veterans and their families • $100.8 million to provide up to 10 additional psychological therapy sessions each year on Medicare • $376 million for new and amended listings on the PBS, including medicines to treat leukaemia, melanoma and Parkinson’s disease • $50 million contribution to the establishment of the Victorian Melanoma and Clinical Trials Centre at the Alfred Hospital • $47.3 million over two years in additional mental health and crisis support services for people experiencing mental illness and distress as a result of the pandemic in Victoria • An additional $3.9 billion for the NDIS Aged care • An additional $1.6 billion has already been provided during the pandemic to support aged care • $1.6 billion for an extra 23,000 home care packages • An additional $11.3 million for training and support for aged care providers and carers of people experiencing behavioural and psychological symptoms of dementia Community services • $220 million to support the delivery of frontline services for families, including: • $133 million for family and child support programs • $87.3 million for family law and family relationship services • $10.2 million to help the Family and Federal Circuit courts manage the impacts of COVID-19 First home buyers • An additional 10,000 places have been added to the Government’s First Home Loan Deposit scheme. Unlike the original scheme, the extension will only apply to new builds. Caps on the value of homes eligible for the scheme have increased to $950,000 for Sydney, $850,000 for Melbourne, $650,000 for Brisbane and $550,000 for Perth, Adelaide and Hobart Education • $146 million to improve the educational outcomes of school leavers and disadvantaged students • $1 billion for new research funding for universities • $326 million to fund 12,000 extra university places • $239 million to maintain Commonwealth payments to higher education providers from 2021 to 2023 as they transition to new funding arrangements Skills and training • $1.2 billion for the Boosting Apprentices Wage Subsidy. For the next 4 years, the Government will cover 50 per cent of an apprentice or trainee’s wage if they are hired between 5 October and 30 September 2021 up to $7,000 per quarter and capped at 100,000 places • The Federal Government will provide $500 million for a JobTrainer Fund, contingent on the states providing matched contributions • $1 billion (when matched by the state and territories) JobTrainer fund to support up to another 340,700 low fee or no fee training places in accredited short courses and qualifications where there is genuine skill need • The Incentives for Australian Apprenticeships Program will be delayed again until 1 July 2021 in an effort to avoid disruption to employers in this time. The existing program will remain in place until then • $24.7 million to extend and “streamline” the ParentNext program which largely covers single mothers • $263 million over four years to respond to 2019 Expert Review of Australia's VET System including: o $91.6 million for a national Apprenticeships Data Management System o $49.5 million to expand the Skills for Education and Employment program for basic language, literacy and numeracy skills training and a scope review for the eventual implementation of a new national framework for foundational skills o $26.9 million for the continued work of National Careers Institute and establishing partnerships with industry, schools and tertiary education institutes o $1.7 million for the development of a National Skills Priority List for Apprenticeships which will replace the existing three with a focus on skills shortages o $75.9 million for the implementation of the Skills Reform Package o $11.9 million for the continuation of VET FEE-HELP (VFH) Redress measures Environment • $269.6 million for the Murray-Darling Communities Investment Package

• $225.7 million to enable the Bureau of Meteorology to safely respond to multiple concurrent weather emergency events during times of natural disaster

• $155.6 million for a package of measures to support farmers and communities in drought including:

• $50.0 million to extend the On-farm Emergency Water Infrastructure Rebate Scheme

• $86.0 million through the Future Drought Fund to establish eight Drought Resilience and Adoption Hubs

• $103.6 million to continue the National Radioactive Waste Management Facility (NRWMF) program including establishing the Australian Radioactive Waste Agency

• $47.4 million to enhance the maintenance of Australia's marine park network, and to remove ghost nets from Australia's northern waters

• $40.6 million to the Sydney Harbour Federation Trust to improve its sites and respond to recommendations from the Independent Review of the Sydney Harbour Federation Trust.

• $29.1 million to implement the National Standard for the Environment Risk Management of Industrial Chemicals

• $11.6 million to the Great Barrier Reef Marine Park Authority to continue its management of the Great Barrier Reef whilst supporting local businesses in a region significantly impacted by the COVID-19 pandemic

Social Services • $2.6 billion to provide two separate $250 economic support payments, to be made from November 2020 and early 2021

• Additional $798.8 million to National Disability Insurance Agency (NDIA) and the National Disability Insurance Scheme (NDIS) Quality and Safeguards Commission

• $539.6 million to progress Tranche Four of the Welfare Payment Infrastructure Transformation (WPIT) program to improve the delivery of payments by implementing automated claim, assessment and payment processes. • $231.0 million for the Second Women's Economic Security Package

• $132.6 million to deliver ongoing funding for frontline social services.

• Additional $104.6 million to support the delivery of the National Redress Scheme

• $62.8 million to strengthen Australia's social cohesion and community resilience in the COVID-19 recovery period to promote Australian values, identity and social cohesion, counter malign information online, enhance engagement with multicultural communities.

• $44.4 million to continue Microfinance, Money Support Hubs and Problem Gambling Financial Counselling measures

• $40.1 million to continue Children and Parenting Support Services such as specialised early intervention and prevention support to at-risk children and families with complex needs

• Additional $28.3 million to extend the Be Connected Program to help Australians aged over 50 to gain the skills they need to participate in the digital economy

• $25.4 million for the Digital Transformation Agency to support the continued delivery of Government digital transformation priorities and improve online service delivery of the Pension Loans Scheme ICT system

• $25.0 million to recognise the impacts of COVID-19 and temporarily revise the independence test for those applying for Youth Allowance and ABSTUDY

• $24.7 million for Services Australia to continue to support the delivery of government payments and services in remote locations

• $22.5 million to sustain the current myGov system and the enhanced myGov Beta.

• $19.8 million implement Australia's Care and Support Workforce Package, as part of the JobMaker Plan

• $16.3 million to encourage young Australians to undertake seasonal work in the agricultural industry

Defence and national security • $1.0 billion from existing resources for accelerated Defence initiatives to support COVID- 19 recovery as part of the JobMaker Plan such as increasing the employment of Australian Defence Force (ADF) Reservists; increasing funding available for Defence innovation, industry and skilling grants; bringing forward investment in the Defence estate; accelerating important ADF capability development projects and - sustainment of ADF platforms and capabilities • $300.2 million to the Australian Federal Police (AFP) to maintain frontline policing, enhance the AFP's surge capacity, and provide for a healthy and agile workforce

• $201.5 million to implement the 2020 Cyber Security Strategy to keep Australian families and businesses secure online

• $173.5 million to strengthen the capacity of national security agencies to meet the Government's national security objectives

• $80.7 million in 2020-21 for ADF deployments associated with domestic COVID-19 assistance, under Operation COVID-19 ASSIST

• $64.1 million to support Department of Veterans Affairs operations and processing of claims for rehabilitation, compensation and income support submitted by veterans and their dependents

• $55.6 million to reactivate the Christmas Island immigration detention facility to accommodate unlawful non-citizens including those released from prisons, but unable to be deported due to COVID-19 international border restrictions

• $41.4 million to continue funding for the Regional Cooperation Arrangement (RCA) in Indonesia, an essential factor supporting Operation Sovereign Borders

• $34.3 million for one-off $1,500 payments in states that have agreed to partner with the Commonwealth under the Pandemic Leave Disaster Payment arrangements

• $29.8 million to establish a new whole-of-government Global Business and Talent Attraction Taskforce to attract international businesses and exceptional talent to Australia

• $28.6 million to support initiatives to modernise Australia's trade system and streamline border services to reduce administrative complexity and improve the efficiency of international trade including extending the Australian Trusted Traders program

• An undisclosed amount for the Department of Home Affairs for data storage for Home Affairs, the Australian Securities and Investments Commission, the Australian Digital Health Agency and the Australian Communications and Media Authority Travel, tourism and regions • The Commonwealth has extended public underwriting of airlines until end of 2020, as well as essential services to regional areas until March • $250 million tourism campaign to convince Australians to holiday in Australia, including: • $207.7 million for an additional round of the Building Better Regions Fund • $50 million for a Regional Tourism Recovery initiative to assist businesses in regions heavily reliant on international tourism • $100 million package for regional recovery partnerships for local initiatives such as infrastructure upgrades and tourism upgrades • The Commonwealth has extended public underwriting of airlines until end of 2020, as well as essential services to regional areas until March • An additional $200 million in grants to extend the successful Building Better Regions Fund for a fifth round, including: • $100 million available across regional Australia for community priorities • $100 million dedicated for tourism-related infrastructure • $100 million to fund Regional Recovery Partnerships, which will coordinate investments in ten regions with other levels of government to support recovery and growth • An additional $30.3 million for the Regional Connectivity Program to support telecommunications projects developed by local communities and providers to benefit regions • $41 million for a Research and Development Program to continue the Government’s regional decentralisation agenda, by funding research and development activities that will benefit regional industries • An additional $28.1 million to extend the Stronger Communities Programme, which provides grants of between $2,500 and $20,000 across the country to community organisations and local governments for small capital projects that deliver social benefits for local communities • $5.7 million in a new Building Strong, Resilient Regional Leaders initiative • $5 million for the Regional Australia Institute’s research program and promotion of regional living Business events • $50 million for grants for the business events industry Arts and television • $250 million for the arts industry • $400 million to attract international production to Australia • $30 million for the production of Australian drama, documentary and children’s content