10 TAKEAWAYS FROM THE FEDERAL BUDGET 2020
Back in December, Treasurer Josh Frydenberg was predicting a budget surplus of $5 billion. Then COVID happened and Australia was hit with a deficit of around $86 billion. This year’s shortfall is forecast to be a staggering $213 billion. The impacts of the pandemic have been far-reaching with business closures, job losses and restrictive measures leading to a fall in consumer and business confidence.
This year’s Federal Budget focuses on job creation and support for individuals and businesses. As well as measures to reduce the immediate burden of economic hardship faced by many, the budget introduces a series of initiatives aimed at driving economic growth and recovery.
Navigating a Federal Budget can be a time-consuming business, so we have compiled a list of our top 10 takeaways for individuals and businesses:
- Investment in Infrastructure
The government has committed to spend $14 billion on road and rail infrastructure projects over the next four years, which is expected to create an additional 40,000 jobs. In addition, $2 billion has been set aside for road safety upgrades and a further $2 billion for water infrastructure projects in regional areas.
- Lower Taxes for Workers
More than 11 million workers will be better off as tax relief is brought forward and backdated to July. People who earn between $45,000 and $90,000 per year will benefit from an extra $1,080 in their pockets, while those earning above $110,000 will receive more than $2,000. The low and low & middle income tax offsets will also be kept for a further year.
- Tax Incentives for Businesses
Businesses with a turnover up to $5 billion will be able to write off the full cost of any eligible assets from 6 October 2020 to 30 June 2022, a measure expected to benefit 99% of businesses. Companies will also be able to offset losses against profits on which tax has been paid from or after 2018-2019.
- Skills & Jobs for Young People
Young people will have more opportunity to gain skills and employment under the new JobMaker scheme. Employers will be paid $200 per week for every new employee aged 16-29 they take on and $100 per week for every new employee aged 30-35. Note that this hiring credit is currently only available for a year and conditions also apply. The government is also investing $1 billion in its JobTrainer scheme for school leavers, and 50% wage subsidies are to be offered to businesses offering apprenticeships and traineeships.
- Changes to Super
Australians should save $17.9 billion over the next 10 years as a result of reforms to superannuation. People will have one rather than multiple super accounts, a YourSuper online comparison tool will be available, and underperforming funds will be held to account.
- Construction Industry Boost
An additional 10,000 first-time home buyers will be able to access loans to build a home or purchase a newly built home, providing a much-needed boost to the residential construction industry.
- Support for Mental Health
People on a Mental Health Treatment Plan will now be eligible for 20 Medicare-subsidised sessions with a psychologist, psychiatrist or allied health provider, which is double the previous number of sessions. Click here for our recent post about the impact of COVID-19 on mental health.
- Making Manufacturing a Priority
A central part of the JobMaker Plan, the new Modern Manufacturing Strategy aims to grow manufacturing and create jobs with a commitment of $1.5 billion from the government to kick start industry-led initiatives.
- Choice for Older Australians
$1.6 billion has been committed to the creation of 23,000 home care packages over the next four years, providing more older Australians with the choice to remain in their homes. Additionally, older Australians (and other welfare recipients) are set to receive two additional cash payments of $250, one in December and the second in March next year.
- COVID-19 Response
An additional $4.9 billion has been allocated towards preventing, detecting and treating COVID-19 across Australia. This includes $1.7 billion to secure access to two frontrunning vaccines currently being developed.
We hope you’ve found this to be a useful summary of some of the key points in the Federal Budget 2020. Now comes the real challenge of successfully implementing all of these initiatives, to provide support where it is needed and opportunities to build a better future.