$78b set aside for infrastructure, while govt clamps down on foreign workers and overseas property investors
Jonathan Pearlman For The Straits Times In Sydney
Australia's ruling conservative Coalition last night unveiled a surprisingly big-spending and big-tax Budget, including a A$75 billion (S$77.8 billion) splurge on roads, airports and rail that could provide a welcome jobs and wages boost.
Despite presenting a bright economic outlook, the federal government's annual Budget included grim news for foreign workers, foreign property investors and the country's largest banks.
The government plans to clamp down on the hiring of foreign workers and to impose hefty taxes and charges on overseas investors in property that will collect an extra A$600 million over the next four years.
Among other losers were the nation's largest banks, which will face a new tax that will collect A$6.2 billion over the next four years.
Treasurer Scott Morrison revealed extra funding for police and intelligence agencies as well as an increase in tuition fees for university students.
SPENDING TO DRIVE GROWTH
The Treasurer has jettisoned decades of conservative fiscal orthodoxy around deficits and, particularly, debt. It's a future where the government will drive economic growth, austerity has been replaced by spending, and taxpayers and banks will foot the bill.
MR IAN VERRENDER, business commentator on the ABC News website.
In an upbeat assessment, the government said the economy would grow in 2017-18 at a rate of 2.75 per cent, increasing to 3 per cent the following year. Growth this year is expected to be 2.5 per cent.
"This is an honest Budget," Mr Morrison told Parliament.
"It is honest about our challenges and opportunities. It does not pretend to do things with money we do not have."
Australia has had a longer run of continuous growth - about 26 years - than any other country. But the economy has been sluggish in recent years, following the end of a decade-long, China-fuelled mining boom.
The government expects a slightly larger-than-expected deficit of A$29.4 billion in 2017-18 but plans to finally deliver a surplus of A$7.4 billion in 2020-21.The surplus, if achieved, would end 12 years of deficits.
Analysts said the Budget was largely designed to try to restore the political fortunes of the Coalition, which is trailing the Labor opposition in opinion polls.
Key Budget expenditures
Defence
Spending will be A$34.6 billion (S$35.8 billion) in 2017-18, with plans to lift spending to 2 per cent of gross domestic product by 2020-21.
Foreign Aid
Spending to be frozen for two years from 2018, resulting in an effective A$303 million cut.
Police and Intelligence
Australian Federal Police to receive an extra A$321 million over four years for counter-terrorism and other efforts, plus around A$150 million extra for the nation's domestic and foreign spy agencies.
Banks
Australia's five largest banks face a new tax on their borrowings from July, due to raise A$6.2 billion over four years. Health An extra healthcare tax from 2019 will raise funding for a national scheme to support people with disabilities.
Education
Schools to receive an extra A$18.6 billion over 10 years, but university students to face higher fees ranging from A$2,000 to A$3,600 for a four-year course.
Transport and Infrastructure
A$75 billion to be spent over 10 years on rail, roads and runways, including A$5.3 billion for a second airport in Sydney.
Jonathan Pearlman
Numerous commentators described it as a "Labor Budget" because it had shown a surprising willingness to increase taxes and to boost spending on areas such as schools and support for the disabled.
The spending programme also included A$5.3 billion for a second airport in Sydney and funding for an inland freight rail network. The inland rail line, to receive A$8.4 billion in funding, will run from Melbourne to Brisbane, spanning 1,700km, and will help farmers to move produce and exports.
"The Treasurer has jettisoned decades of conservative fiscal orthodoxy around deficits and, particularly, debt," said business commentator Ian Verrender on the ABC News website.
"It's a future where the government will drive economic growth, austerity has been replaced by spending, and taxpayers and banks will foot the bill."
Following a move last month to tighten visas and hike fees for temporary foreign workers, the government has imposed a tax of up to A$5,000 per worker on employers who hire foreigners.
There will also be additional taxes on foreigners who own properties. Foreigners will have to pay taxes on the capital gain on their homes - beginning from mid-2019 - though Australian nationals will continue to be spared the tax .
Foreign property owners will also face fines of at least A$5,000 if they fail to either occupy or lease the home for more than six months a year.
The crackdown on foreign property owners comes amid growing concerns about housing affordability following a surge in property prices.
"This measure is intended to encourage foreign owners of residential property to make their properties available for rent where they are not used as a residence and so increase the number of dwellings available for Australians to live in," Mr Morrison said.
Commentators predicted that measures such as the banks' tax and extra spending on retirees and infrastructure were likely to prove popular. But Prime Minister Malcolm Turnbull may struggle to win the support of right-leaning members of his own party, who favour spending cuts and debt reduction.
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