Australia Budget 2017: Winners and LosersBy
Treasurer Scott Morrison on Tuesday announced a A$75 billion plan to build roads, railways and runways across Australia with a budget aimed at boosting growth and the government’s flagging poll ratings. At the same time, he hit the biggest banks with a new levy, cracked down on tax-dodging multinational companies, and charged university students more for their degrees. Here are the winners and losers.
The government’s 10-year nation-building program is set to create tens of thousands of jobs just as a boom in apartment construction slows and as the end of a mining investment bonanza continues to weigh on growth. Morrison will pour A$5.3 billion into a new company to build and operate a new airport for Western Sydney by 2026. The nation’s second and third-largest cities, Melbourne and Brisbane, will be connected by a new 1,700-kilometer inland rail line. The government also said it would take a bigger stake in, or outright ownership of, the Snowy Hydro scheme. That will unlock funds for New South Wales and Victoria states to reinvest in other infrastructure.
First-time home buyers will receive much-needed help to get a foot on the property ladder as prices continue to surge in east coast cities. People saving to buy their first home will get a tax cut on deposit savings up to A$30,000. Seeking to unlock housing stock, the government is also encouraging older people to downsize by giving tax breaks if they funnel proceeds from selling their home into their pension funds. Other measures include releasing surplus defense land on the outskirts of Melbourne, and tax discounts for investments in affordable housing.
Australia’s schools will get an additional A$18.6 billion in funding over the next 10 years. Not everyone’s happy though. Some funding will be re-directed from the wealthiest private schools, while Catholic independent schools have warned they may have to raise fees. The opposition Labor party says the plan is short-changing the education sector by A$22 billion over the decade.
Prime Minister Malcolm Turnbull?
The Liberal-National coalition has been trailing Labor for months in opinion polls, after scraping back into office last year with a razor-thin majority. The budget could deliver a much-needed bounce to Turnbull and reset his economic agenda.
* Patients: The cost of visiting the doctor will drop as a freeze on Medicare rebates is lifted. The Medicare levy will rise 0.5 percentage point to 2.5 percent to help fund the National Disability Insurance Scheme.
* Working Parents: The government will invest A$37.3 billion through June 2021 to help ease child care costs
* Small businesses with a turnover up to A$10 million can instantly write-off against tax new equipment worth up to A$20,000
* The military: Defense spending will reach 2 percent of GDP in 2020-21, three years ahead of schedule
* Survivors of the British nuclear testing program in Australia in the 1950s and 1960s will get more help to cover their health care costs
The five biggest banks in Australia are being hit with a new levy on liabilities that will raise A$6.2 billion over four years. From July 1, ANZ Bank, Westpac, National Australia Bank, Commonwealth Bank and Macquarie will face a 6 basis-point levy on the portion of customer deposits in excess of A$250,000, corporate bonds, commercial paper, certificates of deposit and Tier 2 capital instruments. A new body, the Australian Financial Complaints Authority, will be tasked with resolving disputes, and banks will face fines of as much as A$200 million for misconduct.
Students will have to shoulder a greater share of the cost of their degrees and start paying back loans at a lower income threshold. Meanwhile, universities will be expected to eke out savings. The higher education reform will lead to a saving of A$3.8 billion through June 2021.
Businesses Employing Overseas Workers
As well as tightening visa requirements for skilled workers coming to Australia, the government will impose an annual fee of as much as A$1,800 on businesses that hire them. The A$1.2 billion raised over four years will fund training for Australian workers.
The cherished AAA rating?
Morrison is hoping that he’s done enough to convince S&P Global Ratings to keep Australia in the club of 10 economies that hold the top credit score from all three main ratings companies. S&P has had Australia on negative outlook since July and is expected to deliver its verdict on the budget in coming days. The government says it’s still on track to return to surplus in 2020-21, and is gambling S&P won’t penalize its splurge on productivity-enhancing infrastructure.
Developers’ Overseas Sales
In a blow to some builders, developers will be barred from selling more than 50 percent of a new project to foreign investors. The government will also introduce a so-called “ghost house” tax of A$5,000 on foreigner investors who fail to occupy or lease a property for at least six months of the year.
* Tax-dodgers: The government says it will stamp out hybrid tax abuse by multinational banks and insurance companies that seek to exploit tax differences between jurisdictions. It’s also extending the Multinational Anti-Avoidance Law to cover corporate structures involving foreign partnerships and foreign trusts.
* People on welfare who persistently dodge a requirement to look for work will face steeper penalties. The government will also trial drug testing for 5,000 new welfare recipients.