I can’t recall being so underwhelmed by any recent Federal Budget.
It has left me with the feeling that this budget has been constructed with nothing other than the upcoming election in mind. It’s got Scott Morrison’s fingerprints all over it.
It is a cynical endeavour to sprinkle cash in the areas where it is presumed votes can be shored up or bought. Where criticisms of long-standing Government failings can be countered with a last minute spend.
It seems entirely disingenuous. Morrison’s political ambitions have been prioritised over any view of our future. For sure, some level of ‘vote buying’ is to be expected in an election year. It would be naïve to expect anything less.
Yet it is the total absence of anything that meaningfully changes our economic outlook in the long run that disappoints.
The Federal Budget is an opportunity for any Government to reveal the expected economic impact of their ‘big hairy audacious goals’. To reveal the numbers behind their long-term strategy for Australia. To tell us what they stand for. Josh Frydenberg has been a pretty good Treasurer, in my view. With this budget, he hasn’t given us anything to look forward to.
Nothing to interrupt us and make us say “hang on, this mob has got a pretty decent plan for us, I want to see how this plays out”. As such, it may well be his last budget announcement. I wonder then, as he sits back in his rocking chair 30 years from now, reflecting on his career, will he regret not standing up to be counted? Will he wish he had taken this opportunity to set the direction of our economy for decades to come? Time will tell.
In this post, we cover the budget announcements and in particular, focus on what’s in it for you.
As we continue the economic bounce back it is a shame that migration levels have not increased as employers struggle to find suitably skilled staff.
The Tax Office’s crackdown on multinationals and wealthy people will continue with an expected $2.1 billion in additional revenue expected in the next financial year. If you have any queries regarding your tax obligations, please contact us at BridgePoint Group for expert advice.
The Government has continued infrastructure development with $18 billion for new road and rail projects around the country. Jobs and efficiency will be a positive by-product but in truth, $18 billion doesn’t go far when we are talking about infrastructure. Defence industries also were beneficiaries in the budget with an $15 billion east coast submarine base provided for, as well as upgrades to the Henderson shipyard in WA and other defence projects. On the topic of defence (this time its cyber defence) there has been $9.9 billion (over a ten-year period) to create jobs and expand cyber and intelligence capabilities. The project, called REDSPICE, will create 1,900 jobs and improve our capabilities to defend all businesses (especially the most vulnerable small-business sector) from cyber-attacks. Given what’s happening in the world right now, this is a welcome spend. It’s difficult to know whether it’s enough in dollar terms, or whether it will be effective in its execution.
Russia’s invasion of the Ukraine has seen fuel prices increase dramatically (this is obviously not our government’s fault). The government has cut its fuel excise by 22¢ a litre for six months until September 28. Considering the average fuel price for unleaded in North Sydney for the last week (to 30th March 2022) was $2.05 per litre (diesel $2.19 per litre), it is like putting a band-aid on a gaping wound, especially for businesses where fuel is a substantial cost. The impact of such high fuel prices is also hammering families, especially those that have to drive to work.
For the next four years, small businesses can claim 120 per cent of the cost of laptops, cloud computing and other services to help them “go digital”. Additionally, the same claim can be applied any external training course for staff. This is a gateway to small businesses becoming more digital savvy. We give this initiative a tick because every dollar helps but really, as a small business owner you should be spending money here anyway. Will it induce you to forge ahead with spending you otherwise would not have? An additional $20 deduction is worth $5 to you, at the prevailing 25% tax rate.
The Federal Budget has allowed for a revamped apprenticeship scheme ($2.4 billion over four years) and money for increasing female participation in trades. Included is money to support an increased participation of women in leadership. I feel like we’ve heard this before.
Outside of the metropolitan areas, to increase access to higher speed broadband for regional and rural Australians is backed by $480 million. This seems to be every budget and it is hoped that the implementation occurs quickly. Internet speeds and accessibility is a drag in developing regional areas. The advance to smart-farming is incredibly hamstrung without proper internet access. The agricultural sector has a very strong innovation culture and needs every chance to exploit that right now. An allocation of $13 million to expand ‘patent box’ rules to support farm innovation will assist but ‘city-speed’ internet access would be a massive benefit.
Farmers will benefit in the budget with $100 million (above the forward estimates) for tax breaks on carbon credits which supports biodiversity stewardship.
The tourism industry taking off again will be important and a major boost to the economy. Tourism operators will get $146 million over three years to support the recovery of the tourism industry. This includes $63 million allocated for marketing. Let’s hope this works. Tourism operators have been smashed the past few years and frankly, I don’t know how they keep turning up each day. They need to believe the future is bright.
Incentives and bonuses (being characterised as ‘huge’ but we shall see) will be offered to start-ups under a shake-up of employee share schemes. This is designed to allow start-ups to retain talent and grow. That talent can get skin-in-the-game via salary sacrifice. Innovation is at the heart of any business growth, and given our focus in that area, (and to balance our criticism with some positivity!) we roundly applaud this initiative. Unicorns anyone?
In a further initiative in the innovation space, the Government has promised $2.2 billion over five years to boost the commercialisation of products and services that are the result of university research. There’s no doubt this could turn up some gems. But will it? There will be countless meetings going on in universities around the country this morning as they work out how to dress their projects up for funding and get their share of the new riches that have been promised. Think politics and professional jealousies. Sadly, in too many instances, the objective is the funding, not the project.
Thank you and I hope you enjoyed the summary of the 2022 Federal Budget. If you have any questions regarding tax compliance or accessing the government’s business support packages and initiatives, please give the BridgePoint Group team a call on 1300 656 141 or email email@example.com.