How do you help fund a budget without causing pain at home?
That’s what Treasurer Joe Hockey seems to have done in his federal budget with measures worth more than $8 billion to the bottom line targeting foreigners or international companies and markets.
The big ticket items include $6 billion in previously announced new trade agreements with China, Korea, and Japan.
“And we are expanding that to India which is the fastest growing economy in the world, but still a very small trading partner of Australia,” Mr Hockey said in his budget speech.
“If we could lift our service exports like higher education, tourism, health care and financial services to just half the level of our commodity exports, it would add $50 billion to our economy each and every year.”
A major saving for the budget is a $1 billion cut in foreign aid payments, but the treasurer has also targeted foreigners looking to do business in Australia.
This includes a Multinational Anti-Avoidance Law – soon to be introduced to parliament – to recover unpaid taxes by large international companies “cheating” by shifting profits overseas.
“Everyday Australians rightly believe that if a dollar of profit is earned here, then you should pay tax here,” Mr Hockey said on Tuesday.
To that end the treasurer announced an end to the $20,000 tax free threshold for foreigners on working holidays, which will save $5.4 million.
And there will be a new fee regime for foreign investment in Australia, delivering $735 million in revenue.
Foreign businesses supplying digital products and services will now be subject to GST, with the so-called “Netflix tax” set to raise $350 million.
Even Australians living offshore have been hit, with plans to reclaim $140 million over ten years in HECS debt owed by expatriates.
WHAT’S IN THE BUDGET FOR FOREIGN AFFAIRS?
* Australian official aid budget cut to $4 billion in 2015-16, less than the $5 billion cut the previous year.
* $98.3 million over four years for five new overseas Australian missions;
– Doha, Qatar,
– Buka, Bougainville PNG,
– Makassar, Indonesia
– Ulaanbaatar Mongolia
– Phuket, Thailand
* Australian embassy in Washington to get a new home but cost unknown.
* $50 million towards a gender equality and women’s empowerment fund.
* $138.4 million over two years to continue diplomatic presence in Afghanistan and security.
* $106 million over two years continue diplomatic presence in Baghdad, Iraq and security.
OFFSHORE BUDGET MEASURES WORTH $8B
– $6 billion in new trade agreements with China, Korea, and Japan
– $1 billion cut in foreign aid payments
– Multinational Anti-Avoidance Law to recover unpaid taxes by large international companies that shift profits overseas
– End to the tax free threshold of $20,000 for foreigners on working holidays, which will save $5.4 million
– New fee regime for foreign investment in Australia to deliver $735 million in revenue
– Foreign businesses supplying digital products subject to GST to raise $350 million
– Plans to reclaim $140 million over ten years in HECS debt owed by expatriates