As the COVID economic landscape continues to take shape, Australian Federal Treasurer Josh Frydenberg has handed down the 2021-22 Federal Budget yesterday, labelling it a “jobs budget” with a focus on “Securing Australia’s Recovery.”
Read on for a round-up of the budget proposals, what is most relevant to strata, including:
- The Big Picture – Australia’s economy in 2021-22
- HomeBuilder and other housing stimulus
- Small business stimulus and tax breaks
- Individual tax breaks
- Insurance, resilience and disaster programs and funding
- Other new spending measures
Remember, at the moment these are just proposals and could change as legislation passes through parliament.
- The economy is set to grow by an impressive 4.5% in 2021-22.
- The budget deficit will be large, at $80bn, or 7.8% of GDP, but smaller than last year.
- Unemployment is predicted to be as low as 4.75% by mid-2023.
- International arrivals and overall population growth will remain subdued.
- Helping Australians build and buy their homes
The popular HomeBuilder program has been extended for a further 12 months after receiving 120,000 applications so far and supporting more than $30 billion in residential construction, with off-the-plan apartments and townhouses eligible if construction commenced after 4 June 2020.
Family Home Guarantee scheme—the Government will allow up to 10,000 eligible single parents with dependants to enter or re-enter the housing market with a deposit as little as 2% from 2021-22.
Extending the First Home Loan Deposit Scheme (FHLDS)
An extra 10,000 new places in the FHLDS will be made available in 2021-22 to first home buyers who buy a newly constructed home or build a new home.
The FHLDS allows first home buyers/builders to borrow more than the standard 80% of the property’s value with only a 5% deposit and without paying lender’s mortgage insurance.
Extending the First Home Super Saver Scheme (FHSSS)
- First home buyers will be able to withdraw $50,000 from superannuation to contribute towards a deposit, provided that they reside within the property they buy – this amount has increased from $30,000, due to rising property prices since the scheme began in 2017.
- The FHSSS allows first home buyers to withdraw voluntary contributions (both concessional and non-concessional) plus an amount of notional earnings towards their first home purchase. The total amount released from super cannot include more than $15,000 in voluntary contributions from any one financial year, up to a total of $50,000 across all years plus associated earnings.
- Small businesses with a turnover of up to $5 billion will be able to write off the full value of any eligible asset like a work vehicle or equipment they bought between last budget and June 30, 2023.
- The extension also mean any losses incurred up to June 2023 can be offset against prior profits made going back to the 2018-19 financial year. This is an extension of the similar budget measure last year.
- Simplified liquidation and restricting rules to be introduced.
- Boosting Apprenticeship Commencements (BAC) program sees an extension to 31 March 2022.
- The temporary end-of-financial year tax rebate for low and middle-income earners (up to $1,080 for singles and $2,160 for dual-income couples earning up to $90,000 per year), will be extended in this year’s budget.
- The eligibility criteria remains the same as last budget and is expected to produce approximately $8bn in new tax cuts.
After nearly a decade of advocacy by SCA, Northern Australian MPs and mayors and many property industry stakeholders, the Federal Government announced a $10 billion reinsurance pool and $40 million Strata Title Resilience Pilot Program for residents and owners affected by weather events in Northern Australia.
In addition, $600 million will be set aside through the National Recovery and Resilience Agency to oversee mitigation and forward planning activities to combat disaster throughout Australia.
SCA will be working closely with and advising government on the strata industry perspective for each of these programs to try to get the best outcomes for what can be extremely complex applications of government legislation, regulation and insurance complexities.
The proposed measures in full:
- $1.2 billion over five years to improve Australia’s capability to prepare for, respond to, and recover from natural disasters.
- $600 million towards disaster preparation and mitigation programs through the newly established National Recovery and Resilience Agency (NRRA).
- $40 million to make strata buildings in northern Australia more resilient to extreme weather events. starting with $8m 2021-22, $20m for 2022-23, and $12m for 2023-24.
- Underwriting the $10 billion reinsurance scheme for cyclone and related flood with the program up and running by July 2022.
- Goal of reaching unemployment levels below 5 per cent before any attempts at budget repair are undertaken in the future.
- The employment rebound from last year’s technical recession has exceeded estimates made in September 2020, with unemployment reaching 5.6 per cent in March 2021, below the original target of 6 per cent.
- There will be at least $10bn in additional infrastructure spending over the next 10 years, with major road and rail projects in the spotlight.
Other new measures
- $31bn across the NDIS, Aged Care and mental health and suicide prevention
- $1.7bn investment in childcare
- $350m health and wellbeing measures
- $3.4 billion to boost women’s economic security and safety including support for single mum’s to enter the property market.