|AFGC Summary of the 2017 Budget
The Federal Treasurer the Hon Scott Morrison MP tonight handed down the 2017-18 Budget, which has focused on four key themes:
- to grow our economy to service more and better paid jobs,
- to guarantee the essentials that Australians rely on,
- to reduce cost of living pressures, and
- to ensure that the government lives within its means.
Off the back of better than expected commodity prices, which made up for the lower PAYG tax receipts, there has been a slight improvement in the 2016-17 deficit of $35.1 billion, compared to $36.5 billion forecast in the MYEFO in December 2016.
The deficit is projected to improve from $29.4 billion in 2017-18 to a projected surplus of $7.4 billion in 2020-21.
Infrastructure is a key platform for this year’s budget which has allocated $70 billion to transport infrastructure across Australia to reduce congestion, revitalise cities and grow regions, using a combination of grant funding, loans and equity investments. The Government has also committed to significant spending initiatives on schools, universities and the National Disability Insurance Scheme.
While the Government will be quick to show that there is light at the end of the tunnel in returning the budget to surplus, much of this relies on new taxes. The Government, by 2019-20, plans to reduce its spending as a share of GDP to 25 per cent, but unfortunately tax receipts are on a path beyond 25 per cent of GDP by the same year. Between 2017/18 and 2020/21, receipts are forecast to rise 1.6 percentage points while payments will reduce by only 0.2 percentage points.
The Government remains committed to funding all new policy decisions. At this Budget, the overall impact of policy
decisions on the bottom line is an improvement of $6.3 billion over the four years from 2017-18 to 2020-21.
The key budget parameters are:
||2016-17 MYEFO Forecast
|Government expenditure as a share of GDP
|Net debt as a share of GDP
The key economic parameters in the budget are:
||2016-17 MYEFO Forecast
|Real GDP Growth
|Wage Price Index
The Government maintains it has produced a disciplined budget, achieving this through expenditure restraint whilst required to meet new, targeted, spending commitments; and by increasing revenue. Expected receipts have increased by $20.8 billion, over four years, whilst payments have increased by $14.5 billion over the same period.
Changes in policy since the 2016-17 MYEFO are projected to increase receipts by $1.9 billion in 2017-18, $3.3 billion in 2018-19, $7.0 billion in 2019-20 and $8.5 billion in 2020-21. Funding will be boosted by an increase in the Medicare levy from 2 to 2.5 per cent of taxable income from 1 July 2019, a levy on the major banks and a levy on certain skilled visas.
The major bank levy will be introduced for Authorised Deposit-taking Institutions (ADIs) with licensed entity liabilities of at least $100 billion from 1 July 2017. The threshold will be indexed to GDP growth. Tax receipts are projected to increase by $5.5 billion over the forward estimates.
- $10 billion allocated to the National Rail Program for urban and regional passenger rail projects:
- An additional $8.4 billion to build the Melbourne to Brisbane Inland Rail,
- Regional Road Freight Corridors in NSW to be preserved:
- New England Highway $30.3m.
- Princes Highway $52.5m.
- Mitchell Highway $5.6m.
- Newell Highway $78.8m.
- Additional commitments to rail in the 2017-18 Budget:
- $500 million to upgrade regional rail networks in Victoria.
- $792 million for Perth Metronet.
- $30 million towards development of a business case for Melbourne Airport Rail Link.
- $20.2 million for Murray Basin Rail building on a previous commitment.
- $20 million to progress business cases for faster rail connections between cities and their surrounding regional centres.
- $844m upgrade for the Bruce Highway.
- Western Sydney airport — $5.3bn over 10 years.
- $90 million to promote gas supply through:
- $30.4 million for a Bioregional Assessment program to asses potential impacts on waterways from unconventional gas projects.
- $28.7 million over four years to encourage and accelerate the responsible development of onshore gas for the domestic market.
- $6.6 million to the ACCC to undertake inquiries into competition in retail electricity and gas markets.
- $19.6 million over four years to the Gas Market Reform Group to facilitate gas trading.
- An Additional $7.95 million to the Australian Energy Regulator.
- $472 million in regional infrastructure projects invested in the Regional Growth Fund. This includes $200 million for another round of the Building Better Regions Fund.
- $28.5 million to establish the Regional Investment Corporation to streamline delivery of concessional loans.
- Small businesses with a turnover up to $10m can continue to immediately write off expenditure up to $20,000 for another year.
- Introduction of a $1.6 billion levy on the big four banks.
- Create a one stop shop Financial Complaints Authority – which provides efficient dispute resolution mechanisms.
- Introduce an Open Banking regime which will give customers greater access to the banking sector.
- New misconduct rules will be introduced, and breaches of these will result in fines ranging from $50m to $200m for banking executives.
- Implementation of a plan to strengthen Australia’s food safety system, whilst reducing the regulatory burden for compliant food importers. More responsibility will be placed on food importers, by mandating documentary evidence of compliance with food safety controls. This will be done on a cost recovery basis.
- $10.0 million for a Prime Minister’s Walk for Life Challenge, to be led by The Heart Foundation, which will support up to 300,000 Australians to become new regular walkers by the end of 2019.
- An extra $5.0 million over 4 years for General Practitioners to support Australians to achieve a healthy lifestyle through exercise and better nutrition.
- The Medicare Levy will rise from 2 per cent to 2.5 per cent.
- An additional $7.7 billion over the forward estimates to the states for public hospital funding.
- Changes to the Pharmaceutical Benefits Scheme worth about $170 million and the reintroduction of bulk billing incentives for diagnostic imaging and pathology services.
- An annual foreign worker levy of $1,200 or $1,800 for temporary skilled visas and a $3,000 or $5,000 one-off levy for those on certain permanent skilled visas, depending on the size of the business.
DR GEOFFREY ANNISON
ACTING CHIEF EXECUTIVE OFFICER