By Lilia Guan
Australian deputy prime minister and treasurer, Wayne Swan has released the 2011-2012 budget, with the promise of getting the country back into the black.
Mr Swan stated the floods and Cyclone Yasi will cost our economy $9 billion in lost output and reduce real gross domestic product growth by half of a percent point in 2010-11.
The impact of disasters in New Zealand and Japan will increase this impact to three quarters of a percent point this year.
“The economy and the budget are also still feeling the after-effects of the global financial crisis, with losses that accumulated during that period larger and lingering longer than previously anticipated,” Mr Swan said.
“Tax receipts have been revised down by $16 billion over the first two budget years, taking the total estimated revenue loss from the global financial crisis to around $130 billion over five years.”
Despite these issues the Government plans to invest money into creating jobs and boosting the economy.
Mr Swan announced the Government will invest $3 billion over six years in skilling Australia's workforce and deliver a package of participation reforms.
“We will place industry at the heart of our training agenda, with a $558 million Workforce Development Fund that will deliver 130,000 training places over four years,” he said.
The Budget also delivers a $101 million national mentoring program to help 40,000 apprentices finish training and better meet the needs of industries and regions.
Mr Swan stated the Government planned to invest $100 million in more flexible training models, allowing apprenticeships to be fast-tracked as they acquire critical trade skills.
It will provide up to $1.75 billion over five years from 2012-13 to states and territories under a national partnership, on top of our existing $7 billion investment, to drive ambitious reforms of the vocational education and training system.
The Budget also funds 30,000 more places in the Language, Literacy and Numeracy Program to provide the basic skills essential for a job.
“We're also reaching out to disadvantaged and marginalised groups who risk missing out on the benefits of the strong economy with a combination of rewards, opportunities and requirements,” Mr Swan said.
The Government will cut tax rates for 50,000 single parents who work part-time by up to 20 cents in the dollar, invest $80 million in their skills and move more parents with high-school kids onto job search payments.
To remove tax breaks that can encourage people without children to stay at home, the Budget will phase out of the Dependent Spouse Tax Offset for people born on or after 1 July 1971.
For young people, the Government will extend ‘Earn’ or ‘Learn’ requirements to 21-year olds and create new pathways to full-time employment for early school leavers.
The Government will invest $233 million in 35,000 targeted wage subsidies and extended work experience programs.
Mr Swan stated the budget will allow people with a disability to work more without jeopardising their benefits and introduce new requirements for younger people aged 35 and under on the disability pension with some capacity to work to develop participation plans with Centrelink.
The Government also planned to deliver major investments in health along with a package of mental health reform.
Mr Swan said the Government will invest $2.2 billion over five years to deliver additional services, a greater focus on prevention and early intervention, and a more targeted and better coordinated mental health care system as a step towards long-term reform.
It will also invest $16.4 billion in extra growth funding for public hospitals over six years under our new health deal with the States and Territories.
The Budget brings to $1.8 billion investment in hospitals and health care for our regions through the Regional Priority Round of the Health and Hospitals Fund.
It will also provide $717 million of funding over five years to expand access to diagnostic imaging services and make new medicines and immunisations more affordable.
An extra $53 million will improve access to public dental services, particularly for those on low incomes, and build a bigger dental workforce in preparation for significant reform in 2012-13.
Mr Swan stated the Government planned to pursue its “goal of creating the best educated and trained workforce in the world”.
“We'll provide $125 million each semester, from the start of 2014, in reward payments for the best teachers,” he said.
“Around 25,000 of the country's best teachers each year will receive a reward payment worth up to 10 per cent of their salary.
“We will also invest $200 million over three years for the More Support for Students with Disabilities initiative. This will support students with disability in their classrooms and improve learning outcomes.”
Mr Swan stated the budget included measures to provide help with cost of living pressures particularly for Australians on low incomes and families with kids at school.
From July, the Government will bring forward up to $300 per year of the low income tax offset into pay packets, rather than being delivered at the end of the year.
Family Tax Benefit Part A payments for families with teenagers will be increased by up to $4,208 per year to support families to keep their teenagers in school or vocational training.
The Education Tax Refund will also be extended to school uniforms to help with education costs, increasing the Government's investment by $460 million.
Payment advances of up to 7.5 per cent of their entitlement (capped at $1000) will be provided to meet unexpected family expenses, and giving parents the choice to receive child care support at the time they incur their child care costs.
The budget also includes $4.3 billion of investments in regional infrastructure including hospitals, health care, universities and roads.
“These investments, along with the National Broadband Network, will help lift living standards outside the big cities, provide the best health services and educational opportunities, and help regional communities reach their potential,” Mr Swan said.
Australian businesses – especially small businesses – that are doing it tough because of consumer caution, natural disasters and the high dollar will also have some relief.
This Budget will expand tax breaks that provide cash-flow benefits available to all 2.7 million Australian small businesses, replacing the Entrepreneurs Tax Offset which was only available to around 400000 businesses.
The Government will build on the $5000 instant asset write-off announced last year by allowing small businesses to claim $5000 as an immediate deduction for motor vehicles purchased from 2012-13. This measure will provide a $350 million cash flow benefit to small business.
To make sure local enterprises can seize the manufacturing opportunities presented by the boom, the Budget includes a $34 million package to help Australian suppliers win more contracts to supply resource sector projects.
The solar industry will also receive an additional $13.7 million over two years for the Solar Cities Program.
Also an additional $53.2 million over four years has been provided to the Office of the Renewable Energy Regulator to provide ORER with resources for additional statutory responsibilities.
Australian Solar Energy Society (Auses), CEO John Grimes said funding for the Emerging Renewables program increased from $40 million to $100 million.
Despite the funding, Mr Grimes said the industry will also see cuts being made.
“It is now even more important the Federal Budget allocates 25 percent of the revenue from a carbon price to an independent Green Investment Bank,” he said.
“[The funds would be used] for investment in research and development, demonstration and early commercialisation of large-scale solar and the emerging energy sources.”
Non-profit property organisation, Urban Taskforce Australia said the budget has taken some new, but small, steps towards improving the fabric of cities.
The Taskforce’s chief executive, Aaron Gadiel, said the new measures were mostly “good news”, but represent only a small fraction of the federal investment that will ultimately be required.
Mr Gadiel said the promise of a $36 million “top-down” strategic review of infrastructure by Infrastructure Australia would help sharpen the Government’s accountability for its funding decisions.
“This move give’s Infrastructure Australia the resources and mandate it needs to take the lead on indentifying projects for federal funding,” Mr Gadiel said.
“It no longer needs to wait passively for state and local governments to serve it up project proposals.
“This will remove the Commonwealth’s ability to blame state governments for poor quality funding submissions."
Mr Gadiel said that the $100 million four-year initiative to fund employment hubs in suburban areas was a very practical measure to reduce congestion in our big cities.
“Instead of banning or stopping urban expansion, they are now talking about pro-actively supporting employment growth,” he said.
“This will help match jobs to the strong need for expanded residential areas at the edge of our cities.
He believed ultimately the scheme will need a lot more money, but was an "excellent start".
Mr Gadiel said the $20 million two-year scheme to fund urban renewal projects is welcome, but the funding allocation is modest and its focus on “demonstration projects” will limit its effectiveness.
“This Commonwealth should be neck-deep in its support for urban renewal initiatives, but this program is really just a toe in the water.”
Mr Gadiel said the budget had also allocated $10.1 million for the development and monitoring of new “sustainability indicators”.
“It’s important that these indicators reflect the sustainability concerns of the mainstream community, and the Federal Government ensures that the process is not taken over by fringe groups,” he said.
Mr Gadiel welcomed the announcement of the Prime Minister’s decision to begin “rigorous COAG process” to lead the development of Commonwealth-State reforms.
“The focus on ‘easing congestion’ suggests we might see action on the highly restrictive land use laws that are currently preventing sufficient new homes being built close to jobs, transport and services in the inner suburbs of our major cities,” he said.
The Productivity Commission is expected to publicly release its report to COAG on the reform of planning, zoning and development assessment laws next week.
However Mr Gadiel said the decision to wipe $150 million in funding for the F3 to Sydney Orbital project from the forward estimates period was very disappointing.
“This effectively puts this major motorway project on ice – as far as the Commonwealth concerned,” he said.
The project would be part of the national highway network – making federal funding essential. It was identified by the new NSW Government as a
“missing link” motorway that might be supported by the O’Farrell Government in its first term.
“The axing of this project will be a blow to anyone who drives on Pennant Hills Road regularly, and dashes hopes that we might see some better connectivity between Sydney and the Central Coast and Lower Hunter,” he said.
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