Federal Budget 2020-2021
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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 Australia 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 • New South Wales 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 Sydney 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 • Queensland projects include: • $750 million for Stage 1 of the Coomera Connector (Coomera to Nerang) • $201.2 million for the Bruce Highway 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 Brisbane 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.