Parliament Budget Overview
Tax & Accounting11/05/2021 12:00:00 AM

2021-2022 CCH Parliament Federal Budget Highlights

The Budget lists ‘Increased support for unemployed Australians’ as the single largest item of new spending in the Budget, with $697.4 million in new spending in 2020-1 and $9.46 billion over five years, including the four years of the Forward Estimates.

However the Budget splits Aged Care spending into two separate items – residential care and home care. Together these account for $18.25 billion in new spending over five years.

The Government’s response to the Aged Care Royal Commission amounts to:

  • $263 million in 2020-21 and $7.79 billion over five years on residential aged care and
  • 0 in 2020-21 and $7.5 billion over five years on home care.

In his Budget speech the Treasurer Josh Frydenberg said, “Australia is coming back.

“In the face of a once-in-a-century pandemic, the Australian spirit has shone through.”

He said, “Treasury feared unemployment could reach 15 per cent and the economy contract by more than 20 per cent.

“This would have meant 2 million Australians unemployed.

“It would have been the equivalent of losing the agriculture, construction, and mining sectors.

“Mr. Speaker, today the reality is very different.

“Ahead of any major advanced economy, Australia has seen employment go above its pre-pandemic levels."

“At 5.6 per cent, unemployment today is lower than when we came to government.”

Deficit

The Budget deficit will reach $161 billion in 2020-21, before falling to $57 billion in 2024-25.Mr Frydenberg said, “With more Australians back at work, this year’s deficit is $52.7 billion lower than was expected just over 6 months ago in last year’s Budget.Net debt will increase to $617.5 billion or 30.0 per cent of GDP this year and peak at $980.6 billion or 40.9 per cent of GDP in June 2025.

Coronavirus

  • The Budget includes a further $1.9 billion for the roll out of vaccines. It provides another $1.5 billion for COVID-related health services, including for testing and tracing, respiratory clinics and telehealth.

Personal tax

  • The Budget extends for a further year The Low and Middle-Income Tax Offset, introduced as part of the Government’s coronavirus response. Low- and middle-income earners will receive up to $1,080 for individuals or $2,160 for couples.

Business taxes

Business tax concessions:The Budget extends by one year two business tax concessions announced in the 2020-21 Budget — temporary full expensing and temporary loss carry-back.
Together, temporary full expensing and temporary loss carry-back provide an incentive for businesses to bring forward investment to access the tax benefits before they expire. Combined, the extension of the temporary full expensing and temporary loss carry-back measures is estimated to deliver a further $20.7 billion in tax relief to businesses over the forward estimates. 

Housing

Ahead of the Budget the Government announced that more than 125,000 single parents would also be eligible to shift from long-term renting to owning a home with as little as a 2 per cent deposit, or just $8000, under a government-guaranteed home loan scheme to help women who are marginalised from the property market.

Treasurer Josh Frydenberg, “The Morrison Government is today announcing additional measures to help more Australians own their home sooner as part of the 2021-22 Budget.
“This follows the successful HomeBuilder program which is expected to support more than $30 billion in residential construction with more than 120,000 Australians applying for the grant."

As part of the 2021-22 Budget, the Government will:

  • Establish the Family Home Guarantee with 10,000 guarantees made available over four years to single parents with dependants. The Family Home Guarantee allows them to purchase a home sooner with a deposit of as little as two per cent;
  • Expand the New Home Guarantee for a second year, providing an additional 10,000 places in 2021-22. First home buyers seeking to build a new home or purchase a newly built home will be able to do so with a deposit of as little as five per cent; and
  • Increase the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.

Superannuation

  • The Budget Increases the amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.
  • It also removes the $450 per month minimum income threshold for the superannuation guarantee. The Treasurer said, “This will improve economic security in retirement for around 200,000 women.”
  • The Government has removed the work test on voluntary superannuation contributions to superannuation by people aged 67 to 74.
  • It will also allow those aged over 60 to contribute up to $300,000 into their superannuation if they downsize their home, freeing up more housing stock for younger families.
  • The Pension Loan Scheme has been expanded, providing immediate access to lump sums of around $12,000 for singles, and $18,000 for couples.

Small business – Tax disputes

  • The Budget confirmed a pre-Budget announcement allowing small businesses to litigate tax disputes with the Australian Tax Office before Administrative Appeals Tribunal, rather than the slower and more expensive litigation before the Federal Court, as at present.

Skills and training

  • The Budget provides $2.7 billion for more than 170,000 new apprenticeships and traineeships.
  • It provides 2,700 places in Indigenous girls academies to help them finish school and enter the workforce.
  • And more STEM scholarships for women, in partnership with industry.

Higher education

  • The Budget provides an extra 5,000 places in higher education short courses.

Childcare

  • The Budget confirms the pre-Budget announcement of $1.7 billion investment in childcare.

Infrastructure

The Budget contains $15 billion for additional infrastructure projects including:
  •  the North-South Corridor in South Australia
  • the Great Western Highway and Newcastle airport in New South Wales
  • the new Melbourne Intermodal Terminal in Victoria
  • the Bruce Highway in Queensland
  • METRONET in Western Australia
  • highway upgrades in the Northern Territory
  • Light Rail Stage 2A in the Australian Capital Territory and
  • Midland Highway upgrades in Tasmania.

It also contains: 

  • a further $1 billion in road safety and a further $1 billion in local road infrastructure projects.
  • Through the Building Better Regions Fund, a further $250 million of regional community infrastructure projects, creating more jobs.

The Budget said “funding for these shovel-ready projects will be provided on a use it or lose it basis.”

Digital infrastructure

The Budget contains $1.2 billion for a Digital Economy Strategy. It will

  • Establish a new national network of Artificial Intelligence Centres to drive business adoption of these new technologies.
  • Expand the Cyber Security Innovation Fund to train the next generation of cybersecurity experts.
  • A digital skills cadetship trial which combines workplace and vocational training.

Manufacturing innovation

The Government has established a new “patent box” starting on 1 July 2022.

  • Under the patent box, income earned from new patents that have been developed in Australia will be taxed at a concessional 17 per cent rate.
  • The patent box will apply to the medical and biotech sectors and the Government said will consult on expanding it to the clean energy sector.

Health

The Budget provides new funding for endometriosis, research into pre-term birth and genetic testing for pregnant women, higher incentives to rural and regional GPs for bulk billed services.

Mental health

The Budget includes a $2.3 billion commitment to mental health care and suicide prevention. It includes:

  • More Headspace centres to support more young Australians.
  • Expanding this model to those aged over 25, with a new Head to Health national
  • network of 40 centres.
  • Increased funding for the treatment of eating disorders.
  • Greater access to psychiatrists, psychologists and GPs through Medicare.
  • Universal access to care for people who have been discharged from hospital following a suicide attempt.
  • A new National Suicide Prevention Office.

NDIS

  • The Budget includes $13.2 billion over four years for the NDIS.

Aged care

The Budget commits an additional $17.7 billion for aged care including:

  • 80,000 new home care packages, bringing the total to 275,000 home care packages available.
  • Funds to increase the time nurses and carers are required to spend with residents.
  • An additional payment of $10 per resident per day to enhance the viability and sustainability of the residential aged care sector.
  • Over 33,000 new training places for personal carers, and a new Indigenous workforce.
  • Retention bonuses to keep more nurses in aged care.
  • Increased access for respite services for carers.
  • Funding to increase the regulatory regime to monitor and enforce standards of care.
  • Funds to upgrade essential aged care infrastructure in regional and remote areas.

Women’s security

The Budget includes a further $1.1 billion for women’s safety including:

  • More emergency accommodation.
  • More legal assistance.
  • More counselling.
  • More financial support, including cash payments for those escaping abusive relationships.