The Federal Budget 2016–17 included several measures designed to help small businesses. The tax rate for these businesses was lowered to 27.5 per cent and the turnover threshold was raised from $2 million to $10 million, meaning more businesses would be eligible to access small business tax concessions.
Businesses within this bracket can now also immediately deduct assets that cost less than $20,000 until 30 June, 2017, up from the previous $1000 threshold.
“[This] will help more small businesses to reinvest in their business and grow by helping them to replace or upgrade their machinery and equipment,” Federal Minister for Small Business Kelly O’Dwyer explained.
As part of the budget, the Federal Government introduced a program designed to help young job seekers move off welfare and into employment through training and apprenticeship placements. Under the program, small businesses that take on interns and apprentices will receive an initial upfront payment of $1000. If they then decide to hire the job seeker, they will be eligible for a “Youth Bonus wage subsidy” of between $6500 and $10,000.
Cement Concrete and Aggregates Australia CEO Ken Slattery described the budget as “relatively modest in its approach to spending while providing support to investment and employment growth”.
“The move towards lower company tax rates will support investment in the Australian economy in the medium to long term, and the increase in the small business threshold will, over time, support the growth of the small business sector in Australia and further strengthen employment opportunities,” he commented.
However, Slattery noted that the budget “contained little of specific added value” for the heavy construction materials industry.
“There were no significant new infrastructure announcements contained in the budget but it did reconfirm previous commitments to funding a very substantial infrastructure development program,” he said.
“While it is important that the [Federal] Government has recognised the need to exercise spending constraint, [state] governments will need to focus on ensuring that the infrastructure spending pipeline remains full and continues to support and facilitate economic growth around the nation.”
Some of the new infrastructure spending that was announced included $594 million to acquire land and continue pre-construction activities for the Inland Rail. The project involves the construction of a 1700km rail corridor that will connect Melbourne to Brisbane via regional New South Wales.
The Federal Government also committed $115 million to the Western Sydney Airport (also known as Badgerys Creek Airport). The funding included $89 million for site preparation activities as well as $26 million to develop a concept design for rail access to the airport.
In addition, the budget included new funding commitments for the Ipswich Motorway in Queensland, the Perth Freight Link in Western Australia, and for Victoria’s Monash Freeway and Murray Basin Freight Rail.
Notably, money for the latter two projects will be drawn from the $1.5 billion in Victorian Government funding that was originally allocated to the East West Link, a high profile motorway project that was cancelled in April 2015 after a change in state government.
“The Australian Government remains committed to the East West Link and our offer of $3 billion [in funding] still stands,” Federal Minister for Regional Development Fiona Nash said in statement. “We are ready to deliver the project should any Victorian Government decide to proceed.”
One arguable blow to infrastructure was the Federal Government’s decision to delay its commitment to natural disaster recovery funding.
According to Jackie Trad, the Queensland Deputy Premier and Minister for Infrastructure, Local Government and Planning, the Federal Government was due to reimburse the state approximately $1 billion in funding but had postponed that payment for up to two years, which could mean delays to reconstruction after future natural disaster events.
Under the Natural Disaster Relief and Recovery Arrangements, the Federal Government provides up to 75 per cent of the funding required to respond to and recover from a natural disaster.
There are other indicators that the future for Australian infrastructure development is positive.
The Federal Parliament recently passed legislation to establish the Northern Australia Infrastructure Facility (NAIF) from July this year. With its headquarters in Cairns, Queensland, the NAIF will offer up to $5 billion in concessional finance to encourage and complement private sector investment in economic infrastructure, which, according to the Federal Government, would otherwise not have been built or would not have been built for some time.
In late April, the Federal Government also released its Smart Cities Plan, which involved a commitment of $50 million to accelerate planning and development works on major infrastructure projects and the establishment of an infrastructure financing unit that would work closely with the private sector.