Budget 2021-22: The Balancing Act Budget
The 2021-22 Federal Budget is a balancing act between a better than anticipated deficit ($106 bn), an impending election, and the need to invest in the long term.
Key initiatives include:
· Extension of temporary full expensing and loss-carry back providing immediate deductions for business investment in capital assets
· Introduction of a ‘patent box’ offering tax concessions on income derived from medical and biotech patents
· Tax and investment incentives for the digital economy
· Extension of the low and middle income tax offset
· Child care subsidy increase for families with multiple children
· $17.7 billion over 5 years to reform aged care
· $2.3 billion on mental health infrastructure and programs
· New and extended home ownership programs for first home owners and single parents
It is also a human budget (cynics would say voter focussed), with $17.7 billion dedicated to aged care, more money in the pockets of low income earners, the COVID vaccine rollout, $2 billion for mental health, a women’s economic package including a child care subsidy increase and funding to prevent violence, and a Royal Commission into defence and veteran suicide.
There will also be a lot of money flowing through to the private sector to those that are capable of developing new technologies. Momentum and drive to develop new initiatives is a strong theme and in some circumstances the Government will offset the risk of those initiatives – if you are in the right sectors.
The $1.2 billion digital economy strategy seeks to rewrite Australia’s underlying infrastructure and incentivise business to boldly develop towards a digital future. The program is broad - from upskilling the workforce, the expansion of consumer digital rights, the development of SME digitisation, Government service delivery, to cybersecurity.
Beyond digital, co-funding and seed capital is available to those developing new technologies that reduce emissions, and grow new export markets and jobs in this sector.
Productivity is a key take-out with several measures targeted at encouraging industry to innovate and develop including the extension of full expensing and the loss carry back measures.
