- Global growth has strengthened, rising to its fastest pace in six years. World GDP is forecast to grow at around 3.8% each year through to 2020.
- In Australia, the transition from the mining boom is nearly complete, and growth will be driven by consumption and non-mining investment. Real GDP will grow from 2.75% in 2017-18 to 3.0% in 2018-19 and 2019-20.
- The unemployment rate is forecast to fall to 5.5% in 2017-18, then down to 5.25% in 2018-19 and 2019-20.
- The inflation rate is expected to rise from 2% to 2.25% in 2018-19, to 2.5% in 2019-20.
- Wage growth is forecast to pick up pace, rising from 2.25% in 2017-18 to 2.75% in 2018-19, reaching 3.25% in 2019-20.
- Expected taxation revenue has been revised upwards by a further $12b over four years due to a stronger economy. Total taxation revenue is forecast to rise from $445.1b in 2017-18 to $554b in 2021-22.
- The underlying cash deficit is expected to improve from -$18.2b (1.0% of GDP) to -$14.5b in 2018-19, before returning to a surplus of $2.2b (0.1% of GDP) in 2020-21.
Budget Key Features for Business
- The small business instant asset write-off for amounts up to $20,000 has been extended for another year, to 30 June 2019, with small business defined as any business with an annual turnover of less than $10m.
- The reduced small business tax rate of 27.5% introduced in 2016-17 has been extended to companies with an annual turnover of less than $50m from 1 July 2018.
- A reduction in personal income tax rates over the next six years: a new tax offset giving up to $530 to low and middle-income earners; an increase in the 19% tax bracket to $41,000, and the 32.5% tax bracket to $120,000 to combat bracket creep; and the abolition of the highest (37%) tax bracket by 2024.
- An increase in health funding: $4.8b for Medicare; $30b for public hospitals; $2.4b for new medicines; and $5b for aged care.
- New funding of $24.5b as part of the $75b investment in transport infrastructure.
- $1.5b in new funding for the Skilling Australians fund to assist businesses in getting skilled workers, including encouraging older workers to participate in the workforce.
- $1.9b in additional funding to help grow research and scientific capabilities.
- $224m in new funding for agriculture, fisheries and forestry.
- A $10,000 limit applicable to all cash transactions as part of measures against the black economy.
- $600,00 increased funding for Tourism Australia.
ACT Region-Specific Budget Announcements
- $100m to upgrade the Barton Highway.
- $100m to upgrade the Monaro Highway.
- $16.6m over three years to contribute towards capital maintenance of the National Gallery of Australia.
- $48.7m over four years to commemorate the 250th Anniversary of James Cook’s first voyage to Australia.
- $13.1m over four years for the Australian War Memorial to enhance its digitisation program and support core activities, as well as funding for development of a detailed business case for a gallery master plan.
- A net increase of 912 full-time equivalent non-military APS staff.
- Annual increases in paid parking on national land, with the revenue to be reinvested in capital works by the National Capital Authority.
- Decentralisation of four ACT-based Federal entities to other locations: The Office of the Registrar of Indigenous Corporations; Unique Student Identifier Registrar; Department of Infrastructure, Regional Development and Cities Inland Rail Unit; and Department of Infrastructure, Regional Development and Cities Indian Ocean Territories. The Budget commits to further decentralisation in coming months.
The 2018-19 Federal Budget provides a range of benefits for the Canberra Region, including new funding for road infrastructure, investment in Commonwealth agencies, as well as modest investment in our national institutions.
The budget’s focus on tax cuts will assist consumption driven growth. The Chamber also welcomes the extension of the 10 Year Enterprise Tax Plan to a greater number of small businesses.
Additionally, there are a number of initiatives within the budget where Canberra businesses and institutions will have significant capability and competitive advantage. These include investment in information technology, space, medical science, defence industries, tourism marketing and export growth. The Canberra Business Chamber seeks to support businesses in accessing these opportunities.
Despite the welcome net increase in public service staff we have concerns about the announcement of the decentralisation of four Commonwealth entities and the warning of further agency movements.
Overall the budget supports ACT industry growth through regional infrastructure, workforce development, tax concessions and investment in high value sectors. Unfortunately, the Government’s continued push toward decentralisation creates uncertainty in the ACT economy.