Statement 1: Budget Overview
Supporting the economy and jobs now
There has never been a more difficult time to frame a budget. This Budget is the most critical phase of the Government's strategic response to the global recession, as it commences a comprehensive program of longer term initiatives that will drive future economic growth.
Measures in this Budget raise the level of GDP by ¾ of a per cent in 2009‑10 and ½ of a per cent in 2010‑11, when the economy is expected to be hit hardest by the global recession. The budget impact of new spending is fully offset in the final year of the forward estimates.
The Budget includes measures designed to provide immediate support to the housing sector, Australian jobs and small business.
Supporting Australian jobs
The Government will assist Australians whose job prospects have been adversely affected by the global recession by investing $1.5 billion over five years through the comprehensive Jobs and Training Compact. The demand for education and training will rise in response to the deteriorating labour market, as young people choose to stay in school or undertake further training. Redundant workers will also seek to maintain, update or learn new skills to improve their future job prospects. The Government's Jobs and Training Compact aims to support young Australians, retrenched workers and local communities to get back to work, add to their skills, or learn the new skills required to obtain jobs as the labour market recovers.
The Government will provide $83 million over four years to help eligible job seekers on income support through a temporary Training Supplement. The Training Supplement provides an ongoing payment of $41.60 per fortnight to eligible job seekers on Newstart Allowance or Parenting Payment who are undertaking approved training. The Training Supplement will be available from 1 July 2009 until 30 June 2011. This supplement builds on the Government's earlier temporary increase in the lump sum Education Entry Payment from $208 to $1,158 for eligible job seekers. Investment in training, education and skills is essential to ensure that vulnerable groups are not lost to the downturn.
The Government's $277 million Compact with Young Australians will guarantee an education or training place for every young person under the age of 25 who wishes to up skill; require participation in school, training or work for anyone under the age of 17; and bring forward to 2015 the COAG goal to lift the national Year 12 or equivalent attainment level to 90 per cent. The Government will also introduce new requirements on Youth Allowance (Other) and Family Tax Benefit (Part A) that will encourage greater participation in education and training. The compact will encourage young people to stay at school or engage in further education and training to help prevent many from experiencing long‑term unemployment. This investment in the skills of Australia's young people will also support medium‑term productivity growth.
The Government's $438 million Compact with Retrenched Workers will provide immediate assistance to Australians who have become unemployed. The compact will provide $299 million to give retrenched workers immediate and personalised intensive employment assistance through Job Network and the new Job Services Australia. It will also strengthen the social safety net by reducing income support waiting periods through a temporary doubling of the threshold applying to the liquid assets test for income support recipients. The Government has also entered into an agreement with the major banks to negotiate postponing mortgage payments for up to 12 months with borrowers who have lost their job.
The Government's Compact with Local Communities will provide the regions and communities hardest hit by the global recession with priority assistance through the $650 million Jobs Fund, announced on 5 April 2009. The projects funded will support local jobs and also help the environment, improve community amenity and boost services provided by not‑for‑profit organisations. The Government will also introduce local employment coordinators to oversee efforts to support jobs in communities most disadvantaged by the global recession. The Jobs Fund will supplement actions the Government has already taken at the community level through the local implementation of the $42 billion Nation Building and Jobs Plan.
The $4.9 billion Job Services Australia will commence from 1 July 2009. Job Services Australia will provide more effective, demand‑driven employment services at over 2,000 locations across Australia. Its services will include better incentives for further education and training, improved targeting of more disadvantaged job seekers and streamlined access to assistance.
Extension of the First Home Owners Boost
In response to continuing economic uncertainty and the ongoing success of the initiative, the Government will extend the First Home Owners Boost for an additional six months. This extension will continue to stimulate housing activity, support the construction industry and assist first home buyers to enter the housing market.
For contracts entered into on or before 30 September 2009, the First Home Owners Boost will continue to provide first home buyers with $7000 for established homes and $14,000 for new homes. In combination with the existing $7000 grant under the First Home Owners Scheme, this means first home owners will receive $14,000 for established homes and $21,000 for new homes.
The First Home Owners Boost will then be phased down and cease after 31 December 2009. Between 1 October 2009 and 31 December 2009, the value of the First Home Owners Boost will halve, to $3500 for established homes and $7000 for new homes, providing a total of $10,500 for established homes and $14,000 for new homes when combined with the First Home Owners Scheme grant.
After 31 December 2009 when the First Home Owners Boost ceases, the $7000 First Home Owners Scheme grant will continue, and the Government's direct investment of $6.4 billion for social housing under the Nation Building and Jobs Plan will provide important ongoing stimulus to the construction sector.
Supporting Australian small business
Small businesses are the engine room of the Australian economy, accounting for around 95 per cent of all businesses and around 50 per cent of all private sector employment. The Government understands that the global recession is impacting on Australian small businesses. This Budget includes a number of measures to assist small businesses to manage their operations in the context of slower demand.
The Government's $42 billion Nation Building and Jobs Plan is supporting small businesses by stimulating demand for goods and services. Small businesses are also receiving much‑needed cash flow relief through changes to quarterly pay‑as‑you‑go instalment calculations, and planned changes to business regulation will help to reduce compliance costs and lift small business confidence.
The bonus tax deduction under the Small Business and General Business Tax Break will be increased to 50 per cent for small businesses. This will further help them to invest, bolster economic activity and support Australian jobs. The 50 per cent deduction is available for eligible assets costing $1000 or more acquired between 13 December 2008 and 31 December 2009 and installed ready for use before 31 December 2010. The expansion will have an estimated cost to revenue of $141 million.
A new Small Business Support Line and referral service will be established at a cost of $10 million over two years to assist small businesses affected by the global financial crisis. The support line will provide initial advice and referral services to small business owners on such matters as obtaining finance, cash flow management, retail leasing, promotion and marketing, and personal counselling. The Small Business Credit Complaints clearing house will be integrated as part of the service. This will complement the additional $4 million announced at the Small Business Summit in October 2008 for Business Enterprise Centres and other registered business organisations to support small businesses during the global recession.
The Government's nation building investment in a new National Broadband Network, in partnership with the private sector, will create jobs and opportunities for small business. At its peak, it is estimated that the project will support up to 37,000 local jobs. The implementation study for the rollout of the network will consider ways to provide procurement opportunities for businesses, including local small businesses in telecommunications and related sectors.
Access to superfast broadband will provide opportunities for innovative new business services, greater participation in e‑commerce and improvements in productivity with the adoption of broadband‑based processes. An additional $10 million over two years will be provided to help small businesses establish an online presence and improve their e‑commerce facilities. Grants will be provided to eligible organisations to disseminate information and offer training seminars on e‑business.
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