Federal Budget: Key business measures and budget facts

Here are some brief details of business-related budget measures and budget facts. More extensive information will be available on major business priority measures on the Ai Group website as the Budget response unfolds.

Key Messages and Budget Facts

Key messages

The personal income tax cuts which bring forward to 1 July 2020 the changes scheduled to begin on 1 July 2022 (together with the additional benefit provided by retaining the Low and Middle Income Tax Offset) will lift the spending power of households and underwrite domestic demand.

Other stimulus measures:

• Additional payments to pensioners of $250 in December and March.
• Additional spending on infrastructure.

Business measures are welcome

Full write-off of investments for businesses with turnover below $5 billion.  For investments before 1 July 2022.

Generous loss carry-back for similarly sized businesses who make losses in 2020-21 and 2021-22 (and who have paid sufficient tax in the last few years).

R&D tax incentive, the changes remove the major problems we saw with the proposed changes – the reduced level of support for lower-intensity R&D companies and the retrospective nature of the changes.

Infrastructure changes

$7.5 billion new investment in transport infrastructure

Wage subsidy

From 6 October, there will be a new JobMaker hiring credit to encourage businesses to hire younger Australians.

The JobMaker hiring credit will be payable for up to twelve months and immediately available to employers who hire those on JobSeeker aged 16-35.

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. All businesses, other than the major banks, will be eligible.

Treasury estimates that this will support around 450,000 jobs for young people.

Apprentices and Trainees

• $1.2 billion investment in creating new apprenticeship and traineeship jobs, especially for school leavers
• The subsidy is capped to the first 100,000 places
• Businesses of any size or Group Training Organisations that engage a new or recommencing Australian Apprentice on or after 5 October 2020 may be eligible for a subsidy of 50 per cent of wages paid to an apprentice between 5 October 2020 and 30 September 2021.
• This is to a maximum of $7,000 per quarter
• The subsidy is available to any employer of Group Training Organisationsregardless of geographic location, occupation, industry or business size.
• The Australian Apprentice or trainee must be undertaking a Certificate II or higher qualification and has a training contract that is formally approved by the relevant state training authority.
• Payments will be made quarterly in arrears, with first claims for the subsidy available from 1 January 2021.
• Final claims for payment must be lodged by 31 December 2021.
• Group Training Organisations are eligible and must pass on the full Boosting Apprenticeship Commencements payments to the host organisation
• If an employer is eligible for multiple subsidies, the employer will need to choose which payment best supports their circumstances. e.g. Supporting Apprentices and Trainees or JobKeeper
• Employers and Group Training Organisations are still entitled to other government incentives including commencement, completion, recommencement, declared drought, rural and regional, mature aged worker, skill shortage and support for adult apprentices etc.

Budget Aggregates ($ billion)

	Actual	Estimates
	2019-20	2020-21	2021-22	2022-23	2023-24	Total
Underlying cash balance	-85.3	-213.7	-112.0	-87.9	-66.9	-480
% of GDP	-4.3	-11.0	-5.6	-4.2	-3.0
Net operating balance	-92.3	-197.9	-103.4	-83.5	-5.8
% of GDP	-4.7	-10.2	-5.1	-4.0	-2.7
Net debt	491.2	703.2	812.1	899.8	966.2
% of GDP	24.8	36.1	40.4	42.8	43.8
Gross debt	684.3	872.0	1016.0	1083.0	1138.0
% of GDP	34.5	44.8	50.5	51.6	51.6

Major Economic Parameters

	Outcome	Forecasts
	2019-20	2020-21	2021-22	2022-23	2023-24
GDP (%)	-0.2	-1.5	4.75	2.75	3.00
Employment growth (%)	-4.3	2.75	1.75	1.00	1.75
Unemployment rate (%)	7.0	7.25	6.5	6	5.5
CPI (%)	-0.3	1.75	1.5	1.75	2.0
Wage Price Index (%)	1.8	1.25	1.5	2	2.25
Business investment (%)	-1.8	-9.5	6
Mining investment	4.8	5.5	1.5
Non-mining investment	-3.7	-14.5	7.5
Dwelling investment (%)	-8.8	-11	7
Household consumption (%)	-2.6	-1.5	7

Migration Assumptions

Net overseas migration (NOM) is significantly affected by international travel restrictions and weaker labour markets domestically and globally.

It is assumed to fall from around 154,000 persons in 2019-20 to be around -72,000 persons by the end of 2020-21, before gradually increasing to around 201,000 persons in 2023-24.