Hawker Britton Occasional Papers and Media

Snapshot of the 2009-10 Federal Budget

May 2009

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The Federal Treasurer, the Hon. Wayne Swan, tonight delivered the 2009-10 Federal Budget.

The Budget articulated the Government’s focus on current and immediate economic stimulus and future economic growth.

The Budget includes a significant program of investment in infrastructure, including roads, metropolitan rail, ports, universities and energy efficiency.  These measures signal a move into larger, longer-term projects as part of the Government’s continued response to the global economic downturn.  The Budget also commits to an increase in additional pension payments and other family benefit measures.

Budget Outcome

Key Initiatives

Infrastructure

$22 billion Nation Building Infrastructure including:

Other key measures include:

Budget Initiatives in detail

Infrastructure

The Government will commit a $22 billion investment in infrastructure including investment of $8.5 billion in road, rail and port infrastructure needs. The projects reflect advice from Infrastructure Australia and will be funded from provisions set aside, including in the Building Australia Fund.

Rail 

The Government tonight committed to investing more than $4.6 billion in the construction and planning of nine metropolitan rail projects across the nation:

Roads

The Government will invest $3.4 billion investment in a so-called ‘Network 1’ — the road freight corridor between Melbourne and Cairns that includes the Hume, Pacific and Bruce Highways:

Ports

The Government will set aside $389 million to invest in the capacity of Australia’s bulk commodity ports:

National Broadband Network

As previously announced, the Government plans to partner with the private sector to build a $43 billion national broadband network. This will be supported by an initial investment by the Commonwealth of $4.7 billion.

Clean Energy Initiative

In addition to the Government’s previous announcement of the introduction of a Carbon Pollution Reduction Scheme in 2011 and expanding the national renewable energy target, the Treasurer also announced tonight that the Government will invest $4.5 billion in a new Clean Energy Initiative.  The focus of this initiative is to support low-emission technologies and create green jobs.

R & D red tape cut with simplified tax credit

The Government will simplify and enhance the Research and Development (R&D) Tax Concession to boost business investment. From 2010-11, the Government will replace the complex R&D Tax Concession with a simplified R&D Tax Credit which cuts red tape and provides a better incentive for business to invest in research and innovation.
 
Small business

Increase to the Small Business and General Business Tax-break

The bonus tax deduction under the Small Business and General Business Tax Break will be increased to 50 per cent. This is up from the 30 per cent previously of the cost of eligible assets acquired between 13 December 2008 and 31 December 2009, and installed by 31 December 2010. The expanded tax break will be available to small businesses with a turnover of less than $2 million.
 
Reducing compliance costs and improving tax law

Tonight’s Budget unveiled a range of measures to improve the operation of the tax law by cutting compliance costs for business. Key measures include:

$600 million for ATO strategic compliance package

The Government will provide $595.2 million over four years to help business in the context of the global recession.  The purpose of this measure is to tackle emerging revenue risks.  The funding will support four key measures:

Extension of the First Home Owners Boost

The Government will extend the First Home Owners Boost for a further six months.

World-Class Universities and Research

The Government will invest $5.3 billion in tertiary education, research and innovation over six years. The Government will commit $2.6 billion from the Education Investment Fund for priority infrastructure projects in Australia’s tertiary institutions and research agencies.

This includes:

The Government announced that it will invest $491 million over four years to uncap the number of university places from 2012. This will allow an extra 50,000 students to commence university courses by 2013.

To help achieve the Government’s targets for Australia’s innovation performance, this Budget provides funding of $500 million to encourage additional research, development and commercialisation of ideas, on top of $512 million to help universities fund the indirect costs of research.

From 1 July 2010, the Government will also replace the current research and development tax concessions with an expanded tax credit that rewards firms for research and development.

Paid Parental Leave

The Government is investing $731 million over five years to deliver a Paid Parental Leave Scheme. From 1 January 2011, eligible parents will receive taxable payments at the rate of the Federal Minimum Wage, for up to 18 weeks.

Measures for pensions and carers

Pensioners who receive the Age Pension, Disability Support Pension, and Carer Payment, Veterans’ Service Pension, Income Support Supplement, War Widow /ers Pension, Bereavement Allowance, Wife Pension, and Widow B Pension will all benefit from pension reform.
 
Under the new arrangements pensioners will receive an additional:

The Government also announced:

Superannuation concessions cut

The Government has halved the amount which superannuation fund contributors can contribute to their superannuation accounts at concessionally taxed rates.

In addition the Government announced in the Budget a “temporary” reduction in the amount of personal contributions on which it will pay the matching Government superannuation co-contribution.

Under the changes:

The Budget also contained temporary reductions in the level of the Superannuation Co-contribution. The Government Superannuation Co-contribution matching rate will be reduced from
150 per cent to 100 per cent for contributions in 2009-10, 2010-11 and 2011-12, and to 125 per cent for contributions in 2012-13 and 2013-14 income years.

Hospitals and health care

The Government has announced it will invest an additional $2.5 billion over five years to drive hospital and health workforce reform, in cooperation with the States and Territories.

$3.2 billion will also be drawn from the Health and Hospitals Fund to expand and modernise key public hospitals across Australia, improve cancer treatment facilities, and support cooperative research between clinical researchers and health professionals.

The Government will provide $121 million over four years to relieve pressure on maternity services, and $134 million over four years in a new Rural Health Workforce Strategy to attract medical practitioners to areas of need.

Private health insurance incentive tightened, freeze on family payments
In its changes to private health insurance, from 1 July 2010, the Government will introduce three new ‘Private Health Insurance Incentive Tiers’.

Under the much-anticipated (but not previously announced) changes to private health insurance rebate arrangements, existing arrangements will remain unchanged for singles with income of less than $75,000 per annum and families with incomes of less than $150,000 per annum.

Under the new three tier arrangement:

Hawker Britton will continue to post Budget-related Occasional Papers over coming days.

The Budget 2009-10 is available at www.budget.gov.au .

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