What Budget 2015/16 means for regional Australia
By Su McCluskey, CEO of the Regional Australia Institute
As we ease into the aftermath of the Budget 2015/16 announcement, it’s time to look at the fine print and consider what the package means for the 32 per cent of Australians living in regional areas.
All in all, the 2015/16 Budget has a positive outcome for regional Australia, with decisions to benefit small businesses, farmers, infrastructure and northern Australia, as well as addressing core drivers of regional competitiveness.
We know from our regional competitiveness data – [In]Sight: Australia’s regional competitiveness index – that the three key drivers of competitiveness are technological readiness, innovation and human capital.
The Digital Transformation Agenda will help to make government services smarter, simpler and easier to use online but connectivity through the NBN will be vital for regional businesses.
In the area of innovation, start-ups and entrepreneurs will get simpler access to crowd funding, enabling small businesses to more easily raise funds.
The announced jobs package will focus on young people and older Australians – the latter of which have higher levels in regional Australia than metropolitan areas. Our work on Super Boomers revealed more than 2 million Baby Boomers live outside the capital cities and make up 39 per cent of the regional workforce. For job seekers over 50, employers will now receive up to $10,000 over 12 months as an incentive to hire and keep them on.
High youth unemployment is also a big issue in many regional areas and the youth employment strategy and wage subsidies for employers, are targeted at helping to get young people into jobs.
By focusing on these key drivers of competitiveness, we can better mobilise the 8.6 million Australians who live outside the five major capital cities to actively drive their own prosperous future.
Key winners in Regional Australia
Small business (the majority of businesses in regional and rural areas):
- Tax cuts for small companies through a reduced company tax rate or a tax discount for sole traders, partnerships and trusts.
- Instant asset write-off of $20,000 (previously $1,000). This applies immediately and assets costing up to $20,000 can be claimed as an immediate tax deduction. This will not only benefit the small business buying the asset but it will also boost sales for those selling assets. Note that this will end on 30 June 2017.
- Farmers will benefit from the small business announcements, but will also receive immediate deductions from 1 July 2016 for investment in dams, tanks, bores and new fencing.
- Farmers will also be able to write off feed and fodder storage, such as hay sheds, over 3 years, supporting drought preparation.
- A $5b fund has been announced to provide concessional loans for infrastructure investment, helping to open up our north and providing substantial opportunities for investment and growth.
Losers in Regional Australia
- International citizens working in Australia will not receive the tax-free threshold, so they will pay tax on every dollar they earn. For regional areas this could affect backpackers and holiday workers who undertake seasonal work such as fruit picking, and this may impact on businesses employing them.
- Fly-in-fly-out workers will no longer get the tax zone rebate unless they actually live in remote areas full-time.
Arguably, the economy as a whole has been a loser with a highly stimulus budget doing little to reduce the deficit.
The key for every region in taking advantage of the 2015/16 Budget will be to proactively understand the opportunities unique to their area, and develop region-led initiatives to act on these opportunities. This will enable the stimulus in the short-term to be translated into economic growth and regional development in the longer-term.