Wed 10 May 2017
2017/18 Federal Budget Review – What this means for our Members:
Tuesday night, Federal Treasurer Scott Morrison delivered his second Budget which projects a 10th straight year of deficit, with two more shortfalls to follow before the projected move back into the black.
There were tax rises announced, as well as new saving measures, including another crackdown on welfare compliance. The budget also includes significant changes for the banking sector, with a new big-bank tax and director and executive oversight by APRA.
The following key announcements were made in the Budget which will be of interest to Victorian CCF Members.
The Budget provides additional funding for Victoria, with more than $1 billion for new and upgraded infrastructure utilising funding previously allocated to the Asset Recycling Initiative. This includes:
- Tullamarine Freeway Widening (Section 1): $200 million with $112 million to be provided in 2017–18 to continue work on the 5.5 kilometres from Melrose Drive to the Melbourne Airport.
- Great Ocean Road: $25 million with $3 million to be provided in 2017–18.
- Western Highway—Ballarat to Stawell Duplication: $499.4 million with $77 million to be provided in 2017–18 to duplicate a further 12.4 kilometres from Buangor to Ararat.
- Princes Highway East—Traralgon to Sale Duplication: $210 million with $31 million to be provided in 2017–18 to continue work west of Sale.
- Princes Highway West—Winchelsea to Colac Duplication: $181.7 million with $46 million to be provided in 2017–18 to duplicate a further nine kilometres from Warncoort to Colac East.
In late 2016, the Australian and Victorian governments agreed to the $3 billion Victorian Infrastructure Package, utilising the $1.5 billion in Australian Government funding previously paid to the now-cancelled East West Link. Under the package, the Australian Government is contributing to the following key projects:
- Monash Freeway Upgrade: $500 million.
- Completion of the M80 Ring Road Upgrade: $350 million, taking the total Australian Government funding to $500 million.
- Murray Basin Rail: $220 million, taking the total Australian Government funding to $240 million.
- Rural and Regional Roads Package: $345 million, including an additional $25 million to continue the upgrade of the Great Ocean Road.
- Urban Congestion Package: $85 million, including construction of the O’Herns Road Interchange.
In the 2016 Federal election, the Government committed $392.1 million towards 35 projects across the State, such as the Echuca-Moama Bridge ($97 million) and the Canterbury Road Upgrade ($20 million).
The Government says it remains committed to the East West Link and its offer of $3 billion still stands.
Here are some other details that were announced that affect CCF and the industry from a more national stand-point.
- The projected deficit for 2017-18 is $29.4 billion (1.6 per cent of GDP), a slight increase on the $28.7 billion forecast in MYEFO. Near-term deficits will be worse than previously expected, before becoming better than previously forecast in 2019-20.
- The timetable for the expected return to surplus remains 2020-21, with a projected surplus of $7.2 billion.
- Government revenue as a share of GDP is projected to be 23.8 per cent of GDP in 2017-18, up from 23.2 per cent in 2016-17 and is forecast to rise to 25.4 per cent in 2020-21 – an increase of 2.2 per cent over the forward estimates.
- The Government’s spending share is projected to remain flat over the forward estimates at around 25 per cent of GDP.
- The Government expects to no longer borrow to pay for everyday expenses from 2018-19.
- Treasury has upgraded real GDP to 3 per cent each year from 2018-19. Similarly, nominal GDP has been lifted to 4.75 per cent by the end of the forward estimates.
- Extension of the small business instant asset write-off scheme allowing businesses with turnover up to $10 million to immediately write off expenditure up to $20,000 for a further year (originally due to finish on June 30, 2017).
- Through the National Partnership on Regulatory Reform, the Government will provide up to $300 million over two years to States and Territories that reduce red tape for small business.
- Amending the small business capital gains tax concessions to ensure that the concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business.
- Replace current requirements on businesses employing foreign workers with an annual foreign worker levy of $1,200 or $1,800 per worker per year on a temporary work visa and a $3,000 or $5,000 one-off levy for those on a permanent skilled visa. This levy will raise $1.2 billion over four years which will go to the Commonwealth-State Skilling Australians Fund. States and Territories will be able to access this fund when delivering on commitments to train new apprentices.
- Confirmation of the Government’s intention to reduce corporate tax rate to 25 per cent for all businesses.
- Increase the maximum financial penalties under the Australian Consumer Law by aligning consumer penalties with the competition provisions of the Competition and Consumer Act 2010 from 1 July 2018.
- $24 million investment in Rural and Regional Enterprise scholarships.
- The Government is committing over $70 billion from 2013-14 to 2020-21 to transport infrastructure across Australia, using a combination of grant funding, loans and equity investments;
- The Government is establishing a 10-year allocation for funding road and rail investments, recognising that many transformational projects are planned and built over many years. This will deliver $75 billion in infrastructure funding and financing from 2017-18 to 2026-27.
- This Budget expands the use of equity and debt financing to boost the Government’s infrastructure investment.
- New road and rail investments – The Government is establishing a $10 billion National Rail Program to fund regional and urban rail investments. The Government is also providing $500 million for Victorian regional passenger rail, including $100 million for a Geelong Rail Line Upgrade. A further $20.2 million is also being provided for Murray Basin Rail and $30 million to help plan a Tullamarine airport rail link.
- In Queensland, the Government is providing $844 million for new Bruce Highway priority projects, including for a Pine River to Caloundra upgrade.
- In Western Australia, the Government is providing $1.6 billion towards a $2.3 billion road and rail infrastructure package with the Western Australian Government. The package includes a combined $1.2 billion towards the METRONET rail project and $100 million for better road access to the Fiona Stanley Hospital precinct.
- Western Sydney Airport – The Government is providing up to $5.3 billion establishing WSA Co to develop Western Sydney Airport. Works will commence by late 2018 and airport operations by 2026, creating 20,000 jobs.
- Investing in infrastructure in our cities and regions – Backing regional Australia Building growth in our regions remains a key focus of the Government, ensuring the benefits of economic growth are shared across the country. Melbourne to Brisbane Inland Rail Work on one of the largest investments ever seen in regional Australia, the Melbourne to Brisbane Inland Rail, will commence in 2017-18. The Government will provide an additional $8.4 billion equity investment to the Australian Rail Track Corporation to deliver Inland Rail.
- Regional Growth Fund – The Regional Growth Fund will invest $472 million in regional infrastructure projects that back our regions’ plans to adapt to the changes taking place in the economy. This will include $200 million for a further round of the successful Building Better Regions Fund.
- Regional Investment Corporation – The Government will provide $28.5 million to establish the Regional Investment Corporation to streamline the delivery of $4 billion in concessional loans. This includes the $2 billion National Water Infrastructure Loan Facility and the $2 billion Farm Business Concessional Loan Scheme. These loans will help secure growth, investment and resilience in rural and regional communities.
- The Snowy Mountains Scheme is the benchmark for nation building infrastructure. The Commonwealth is open to acquiring a larger share or outright ownership of Snowy Hydro, from the NSW and Victorian State Governments, subject to some sensible conditions. First, all funds received by the States would need to be reinvested in priority infrastructure projects. Second, Snowy Hydro’s obligations under its water license would be reaffirmed and the government would commit to work together to expedite and streamline environmental and planning processes associated with Snowy 2.0, without compromising any standards or controls. Third, Snowy Hydro would have to remain in public hands. Discussions have begun with NSW and invited similar discussions with Victoria.
- Backing our regions – The Government is committed to building the capacity of our regional communities by boosting their skills base and supporting job creation. The Government is also investing $24 million in Rural and Regional Enterprise Scholarships .