Federal Budget 2017: What you needed to know
“Fairness, Opportunity and Security”
The Treasurer Scott Morrison delivered his second Federal Budget in May 2017. This Budget was designed to align with the principles of “fairness, opportunity and security”. The Government is aware of electorate frustration and was keen to win popular support from this Budget including a new Big Bank Tax, infrastructure spending, employer levies for certain foreign workers, restrictions on foreign investment and tackling housing affordability.
Mr Morrison acknowledged the pain that small business owners and wage and salary earners had put up with over the past few years, but also noted the Government had to live within its means. He believed that the 2017 Budget was about making the right choices for better days ahead.
Mr Morrison announced a Budget deficit of $29.4bn, slightly higher than expected, but even before the Budget was announced he claimed that “things are beginning to look up” and the economy will be in surplus by $7.4bn in 2020-2021. However, getting to surplus will largely be achieved through higher taxes.
The 2017 Budget speech also revealed that this year the Government expects to boost economic growth through significant investment in key sectors. The Budget focused on creating conditions for further growth and prosperity by using “good debt” wisely. This includes new Government funding of over $70bn in national transport infrastructure projects. In addition, the Government committed to an increase in spending of $18.6bn on education over the next 10 years, and an increase in healthcare spending of $10bn.
Like most Budgets of modern times, many of the announcements came as little surprise because the amount of pre-Budget chatter was considerable. Details on key sectors such as infrastructure and education, and how they would be affected, were released well before the Budget announcement.
#2017Budget AT A GLANCE
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Some of the key tax changes included:
- The Medicare levy for all Australians increasing to 2.5% starting 1 July 2019
- Housing affordability measures and tax saving measures for first home buyers including salary sacrifice and superannuation concessions
- The $20,000 instant asset write-off for small businesses extending until 30 June 2018
- The Government remaining committed to reducing the corporate tax rate as previously announced
- Increasing the non-resident withholding tax on real property sales and reducing the $2m threshold
- A new levy on foreign workers that is expected to raise $1.2bn and
- The big banks will face a new levy starting 1 July 2017.
The key message from the 2017 Budget was that the Government is under pressure to perform. It believes it has delivered a Budget that it can get past the Senate and address the pressing national economic issues.
Bentleys Director Ross Prosper comments on the 2017 Budget announcement
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