The 2019 Federal Budget dropped on April 2 and being the first and possibly the last for Federal Treasurer Josh Frydenberg and newly agreed PM Scott Morrison, it has been served up as the platform that may or may not secure votes for the upcoming election.
The 2019 Budget is unique in many ways. The first is that there is a huge catch. Because the Budget has been unveiled so close to an election, there simply isn’t enough time for any of the elements of the new Budget to pass through Parliament. So, what that means, and here is the catch, is that everything in the Budget will become law only if the Coalition wins the election. There is a chance that Labor might agree to match the announcements if they are voted into office, however, the whole thing relies almost solely on re-election.
Treasurer Frydenberg opened the Budget briefing saying that Australia is finally in surplus for the first time in 12 years, with the surplus projected to last for many years to come, (as long as the Coalition is re-elected).
The surplus comes at a convenient time for one particular reason, and that is a huge surge in iron ore prices. Because of the surge in Australia’s largest export, revenue jumped in the last few months.
Mr Frydenberg said in his parliamentary address that for the first time in 12 years, our nation is again paying its own way. But the comment is conditional, according to the Coalition.
The Budget, however, did include some interesting announcements. They include:
- Further tax cuts for individuals
- An increase in the thresholds for the instant asset write-off for businesses
- More flexible superannuation policy to help people prepare for retirement
- $285 million to help four million Australians cover their rising energy bills
- The Government is looking to release 10,000 additional aged home care packages over five years, at a cost of $282 million. In addition, there is an immediate $320 million subsidy boost for residential aged care recipients.
- The non-refundable Low- and Middle-Income Tax Offset (LMITO), will be increased from a maximum of $530 to $1,080 per annum, from FY 2019 through to FY2022.
- Australians earning between $48,000 and $90,000 will be eligible for the maximum offset
- Significant changes to Division 7A (dealing with loans/payments to shareholders and associates) which were proposed to apply from 1 July 2019 have been deferred to 1 July 2020.
- From FY 2022, ABN holders with income tax return obligations will have their ABN registration cancelled for non-lodgement of taxes. From FY 2023, ABN holders must confirm accuracy of details on the ABR annually.
- A major theme of the Budget is Congestion busting with a $100 billion spend on fast roads, ports and rail links. The increase includes fast rail plans across the country, including feasibility studies for fast rail connecting Brisbane to Moreton Bay and the Sunshine Coast or to the Gold Coast.
- In Queensland, the Gateway Motorway, the Bruce Highway and the Warrego Highway will get hundreds of millions of dollars in funding.
The Budget may have come too little too late for property investors and home buyers. It rolls in at a time of an economic slowdown on a global level, alongside collapsing house prices, public frustration with the revolving door of Australia’s leadership, hardship caused by drought and natural disasters, wage stagnation, which is serving to weaken consumer and business confidence.
In the last two years, Australia’s housing market has gone from a boom to a slowdown that doesn’t look great for the economic outlook.
“Uncertainty about the outlook for the housing market, in particular the extent to which housing prices fall, poses a downside risk to the forecasts for both dwelling investment and consumption.
The residential housing market has cooled, credit growth has slowed, and we are yet to see the full impact of flood and drought on the economy,” Frydenberg said.
The housing slowdown comes amid a crackdown on bank lending, predominantly to investors and riskier borrowers.