Joe Hockey has thrown $5 billion of tax relief at small business and farmers and announced $4.
4 billion in support for families in a bid to stimulate the economy and kickstart the coalition’s hopes of staying in office.
“This is a budget that unleashes our nation’s potential,” the Treasurer declared as he delivered his second budget on Tuesday.
A deficit of $35.1 billion for 2015/16 defied economists’ expectations of a figure in the 40s, and the government still expects to return to surplus in 2019/20 despite tough economic conditions.
But worryingly the budget papers still forecast a jobless rate of six per cent or over until 2018/19, despite a 0.5 per cent lift in economic growth.
The government would achieve its aims through sensible savings, prudent spending and redirected funding to small business, child care, infrastructure to boost growth and jobs, Mr Hockey said.
Small business will get a corporate tax rate cut of 1.5 per cent, an annual five per cent tax discount of up to $1000 a year for unincorporated businesses and, from budget night, an immediate tax deduction for all items purchased by a small business up to $20,000.
This means business owners will be able to buy new kitchen equipment, or a van, or computer and get an instant tax deduction.
Start-up companies will be able to deduct the costs of starting a new business, with employee share schemes encouraged through tax breaks.
Farmers will get an immediate tax deduction for new investment in water facilities and new tax breaks for fodder storage and fencing.
Western Australia, Queensland and the Northern Territory will share in a new $5 billion northern Australia infrastructure facility providing cheap loans for new ports, pipelines, electricity and water infrastructure.
The coalition’s unpopular idea of blocking under-30s from getting the dole for six months has been dumped and replaced with a four-week waiting period for under-25s.
A $4.4 billion families package includes a simplified child care subsidy to start from July 1, 2017, with a top-up fee for disadvantaged children.
Paid parental leave “double dipping” – accessing both employer and government schemes – will stop from July 1, 2016, but the measure is expected to be blocked in the Senate as it is linked to family tax benefit cuts.
The budget confirmed changes to the age pension assets test from January 1, 2017 – easing pressure on the $44 billion annual spending on pensions.
Tax receipts have been downgraded by $52 billion since the 2014 budget, $20 billion due to falling iron ore prices.
In a bid to recoup some of this, tax-avoiding multinationals will be chased down, fringe benefits on meals and entertainment will be capped, foreign investors will pay fees and working holiday visa holders will pay more tax.
As Australian troops and intelligence agencies deal with the threat of Islamic State, the national security budget will be boosted by $1.2 billion including new computers and an online campaign against extremists.
Fifty-five road projects will start construction in 2015, but a $3 billion recommitment to Victoria’s East West Link flies in the face of the Andrews’ government opposition to the major road project.
Following the debacle of last year’s Medicare co-payment, changes to health are more modest – a review of the Medicare Benefits Schedule, $1.6 billion for new drug listings including cancer treatments and the first payment from the medical research future fund of $100 million.