The Federal Budget 2010 explained
THE Federal Budget is short on big-ticket spending initiatives, but full of smaller, targeted measures designed to give specific sectors a boost.
SmartCompany has ferreted through the Budget papers to find out how the Budget will impact your sector.
Advertising and marketing
Nothing specific for this industry, although as we said when the Henry Review was released, the changes around small business investment write-offs is likely to create plenty of interest in B2B selling when it kicks in mid-2012, particularly in the lead up to tax time. At least there was nothing bad in the Budget for this sector, unlike last year when the extension of the Do Not Call Register to cover business numbers gave this sector a shock.
As in previous years the focus here is on drought assistance to the nations farmers. Most programs have received extra funding, which should help the sector with its recovery. The sector will also benefit from new biosecurity measures, which received $61.3 million in funding.
Construction and engineering
The creation of a new $700 million infrastructure fund, announced as part of the Government's response to the Henry Review, is good news for the sector. On top of this there was $1 billion for rail upgrades, which should also provide work for those in this sector.
Financial services and insurance
If there is one sector that is a real winner from the Budget, it is financial services. For starters, the Government will encourage savings by providing a 50% tax discount on the first $1,000 of interest earned on deposits, bonds, debentures and annuity products. The Government will also phase down the interest withholding tax rate on interest paid on offshore borrowing to encourage foreign institutions into the market, and create something called the Centre for International Finance & Regulation to provide research and training in the sector. Add to this the increase in the superannuation guarantee and it's easy to see that money will pour into this sector over the next decade.
Health and pharmaceuticals
A winner and a loser. On the plus side, there was $2.2 billion for new health initiatives, including $467 million for a new e-Health initiative. On the negative side, Government spending on pharmaceuticals will fall by around $2 billion, and the tax break for medical expenses has been reduced. Still, it's worth remembering that this is another sector that will get plenty of budgetary attention in the future as the population ages.
A winner on two fronts. The new e-Health initiative should provide a real boost to the sector, which has been pushing for the Government to take medical records online for many years.
The IT sector should also enjoy a boost from the Government's new skills package, which was worth $600 million. As one of the sectors already suffering acute skills shortages, at least some of the 39,000 training places will go to IT.
While the new spending on skills will be welcomed by manufacturing, the automotive sector will be less pleased with Industry Minister Kim Carr's decision to reduce funding to the green car innovation fund by $200 million over three years (from $1.3 billion to $1.1 billion). It's a strange decision – while the Government's climate pollution reduction scheme is on the backburner, it seems strange to reduce funding to one of the programs that would have helped the car sector in the long-term.
The media sector already knew all about its big win – a $210 million rebate on broadcast license fees. In another win, the Government will invest $375.4 million over 12 years to provide transmission of digital free-to-air television services from a new satellite platform as part of the switch to digital television.
Accounting bodies have been positive about the Government's decision to simplify tax returns by creating an option for taxpayers to take a standard deduction of work-related and tax expenses, starting at $500 in 2012-13 and rising to $1000 in 2013-14. However, what impact this will have on smaller tax agents, accountants and bookkeepers really remains to be seen. The Government predicts 6.4 million taxpayers could eventually use the option, meaning they might not even need to see a tax agent at all at tax time. That could really hurt those accountants who concentrate on fast-turnaround individual tax work.
Nothing specific for this sector, although the Property Council has welcomed extra funding for infrastructure and skills, as well as the fact the Budget is heading back towards the black.
Resources and energy
The Government's reliance on the resources sector is highlight by the budget papers. Not only are the Budget's growth forecasts largely underpinned by a big rise in business investment by the mining sector, but the new Resources Super Profit Tax is forecast to add a whopping $12 billion to the Government coffers over the next four years. Of course, these two facts do appear to be at odds – if Super Profit Tax gets up, will mining investment really be as strong as the Government thinks?
The Australian Retailers Association were extremely disappointed with the Budget, claiming there was no immediate help for small retailers who find themselves operating in some of the worst trading conditions in years. While the cuts to the corporate tax rate and the immediate asset write-off is good, smaller retailers won't see the benefits of these programs for more than two years.
Nothing specific for this sector, although Wayne Swan did make it clear that the National Broadband Network is a key focus for the Government going into the next election.
Tourism and leisure
Two area of the leisure sector received a boost. Recreational boat builders will benefit from a change to GST laws that will make it easier for people to buy boats for export without needing to pay GST, while the film industry will be helped with more attractive tax breaks.
Transport and logistics
Another big winner. The Government will invest $1 billion in the Australian Rail Track Corporation to help improve the efficiency of Australia's freight rail system. The new $700 million infrastructure fund paid for by the Resources Super Profit Tax will also be focused on rail, roads and ports.