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FACTSHEET: KEY POINTS BUDGET 2016-17
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Key points Budget 2016-17

 

General overview and economic outlook:

The Federal Budget has been affected by a combination of sluggish economic domestic activity across key sectors, as well as an overall weakening of demand for Australian exports.

The Budget shows 2016-17 will be in deficit ($39.9 billion cash) with a $37.1 billion deficit in 2017-18. There is no projected surplus within the forward estimates; however, the Government maintains that a surplus of 1% of GDP should be delivered as “soon as possible”.

The Australian economy will grow at a steady rate of 2.5 per cent in 2016-17, increasing to 3 per cent in 2017-18. Unemployment is also projected to remain steady at 5.5 per cent for the remainder of the estimates period.

The Budget 2016-17 reflects the Australian Government’s commitment to balance budget repair with strategic and targeted investment to assist in the economic transition beyond the mining boom.

In spite of the difficult financial situation, Australia is showing strong comparative economic growth and the Australian economy is forecast to return to deficit and retire public debt faster than most economies in the developed world.

 

Budget Priorities:

The Budget 2016-17 reflects the following Australian Government priorities outlined in Budget Paper No.1:

  • The Government’s plan for jobs and growth;
  • Increasing the sustainability of the Australian tax system; and
  • Continuing to focus on repairing the Budget and reducing the debt burden.

 

Key initiatives and savings measures:

It is important to note that it is likely that the Federal Election will be called in the next week, therefore, it is reasonable to expect that the limited announcements in this Budget are designed to enable more measures to be announced during the election campaign.

  • The Ten-Year Enterprise Tax Plan:

o   Increasing the threshold of the 32.5% tax bracket to $87,000 from $80,000;

o   Reducing the overall Corporate Tax Rate to 25%; and

o   Increasing the threshold for a small business from $2 million annual turnover to $10 million.

  • An additional $2.9 billion in hospital funding to the states and territories.
  • Superannuation Reform package, which includes:

o   30% tax rate for contributions for those with incomes over $250,000;

o   Institution of a $1.6 million maximum account cap on tax-free transfers; and

o   Reducing the annual non-concessional limit on individual contributions to $25,000.

  • A conditional increase of $1.2 billion in schools funding to the states from 2018-20.
  • Increasing the excise on tobacco products, raising $4.7 billion over the estimates period.
  • The institution of a Diverted Profits Tax of 40% on companies that attempt to send profits offshore, expected to raise $650 million over the next 4 years.
  • Youth Employment Package - $840 million over four years to provide, training, financial support and wage subsidies for vulnerable unemployed people under 25 years old.
  • $1.7 billion Child and Adult Public Dental Health Scheme, funded through re-prioritising of existing and related funding streams.

 

Of interest to local government:

  • Increasing Roads to Recovery by $50 million per year from 2019-20, making the annual payment $400 million, signaling an intention to continue the program beyond the expiry of 2019.
  • $2 billion National Water Infrastructure Loan Facility to support major projects over the next 10 years.
  • Re-allocation of $101 million from the National Landcare Programme to support the Reef 2050 Plan.
  • Additional $20 million for the 20 Million Trees Programme.
  • $56.1 million funding towards marine biodiversity.
  • $2.1 billion deposit into a yet to established NDIS Savings Fund.
  • An additional $49.7 million for the ABC and SBS
  • $5 million in additional funding to support activities designed to combat violent extremism in communities. 


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