The budget surplus was the centrepiece of the 2019-2020 budget. The 2019-20 Budget is a pre-election budget. There is a focus on apprenticeships and education. The key messages are focusing on jobs and growth. Emphasis has been placed on delivering the ‘First surplus in 12 years’. Infrastructure is a centrepiece, with the government announcing an increase on the 2018 budget ‘record’ $75bn infrastructure investment bringing it up to $100bn. Aside from infrastructure, housing and the built environment more broadly, are barely mentioned. Read on for the full bespoke budget debrief exclusively for Institute members. 

The Economy

Globally:

• Unemployment rates in a number of advanced economies are near record lows and there has been a pick-up in wage growth in the United States, euro area and Japan
• Australia is expected to continue to benefit from growth in major trading partners, with economies in the Asian region growing relatively strongly
• Uncertainties remain around trade tensions, emerging market debt vulnerabilities and geopolitical issues. Australia will continue to promote and benefit from free and open trade

Domestically:

• There is a budget surplus of $7.1 billion in 2019-20
• Total revenue for 2019-20 is expected to be $513.8 billion, an increase of 3.6 per cent on estimated revenue in 2018-19. Total expenses for 2019-20 are expected to be $500.9 billion, an increase of 2.8 per cent on estimated expenses in 2018-19
•  The residential housing market has cooled, credit growth has eased and we are yet to see the full impact of flood and drought on the economy
• GDP growth is expected to pick up to 2¾ per cent in 2019-20
• There is a commitment to creating a further 1.25 million new jobs over the next five years 

Tax

• The Government will keep taxes as a share of GDP within the 23.9 per cent cap.
• Immediate tax relief for low and middle income earners of up to $1,080 for singles or up to $2,160 for dual income families to ease the cost of living
• Lowering the 32.5 per cent rate to 30 per cent in 2024-25, ensuring a projected 94 per cent of taxpayers will face a marginal tax rate of no more than 30 per cent
• A further $158 billion of tax relief, building on an already legislated Personal Income Tax Plan.
• SMEs to get additional tax relief through company tax cut to 25 per cent+ access to $2bn finance fund
• Increase and expansion to instant-asset write off, up to $30,000 every time used and include businesses up to a turnover of $50m. 

Skills

A new $525 million skills package (Vocational Education and Training)

• Create 80,000 apprenticeships
• Double incentive payments to employers (now $8k) + $2k payment to apprentices
• 10 new training hubs
• Further funding to increase participation of women and girls in STEM

Higher Education

• The government has committed to investing $17.7 billion in the university sector in 2019. This is projected to grow to more than $20 billion by 2024
• The budget provides for $93.7 million over four years from 2019 20 for scholarships for students to study at a regional campus of a university or vocational education training provider

Climate change and sustainability

• A $2 billion Climate Solutions Fund will boost agricultural productivity, support jobs for Indigenous communities and improve biodiversity and water quality, as well as reduce greenhouse gas emissions.
• The budget commits $79.2 million to help households, businesses and community groups lower their power bills by helping them better understand their energy consumption and invest in more energy efficient appliances.
• The budget provides $137 million for Practical Environment Restoration to support Australia’s natural environment. This includes a $100 million Environment Restoration Fund to help protect Australia’s threatened species, restore the coasts and waterways and take practical action on waste and recycling.
• A new National Electric Vehicle Strategy will ensure a planned and managed transition to new vehicle technology and infrastructure.

Energy

• The budget commits $284 million for a one off, income tax exempt payment of $75 for singles and $125 for couples to more than 3.9 million eligible social security payment recipients, assisting with their next power bill and cost of living expenses
• The Snowy 2.0 project has been provided with a $1.4 billion equity injection. The project will firm up intermittent renewable energy and provide storage which can meet the peak demand of up to 500,000 homes 

Infrastructure

The budget boosts infrastructure spending to $100bn over a decade (up from $75bn)

• This includes $23bn of new funding however much of this appears to remain unannounced (in preparation for the upcoming federal election campaign)
• Includes $6.5bn over the forward estimates and over 30 additional major projects
• Four-fold increase to the Urban Congestion Fund (announced in last year’s budget) from $1bn to $4bn (these predominantly appear to be road projects)
• Will include $500m commuter car park fund
• $2bn fast rail Melbourne to Geelong (previously announced)

–   Includes $40 million (from last year’s budget) for detailed assessments of five fast rail corridors from Sydney to Wollongong, Sydney to Parkes (via Bathurst and Orange), Melbourne to Albury Wodonga, Melbourne to Traralgon, and Brisbane to the Gold Coast.

–  These will complement the three presently underway that the Commonwealth has funded, which include Sydney to Newcastle, Melbourne to Greater Shepparton, and Brisbane to the Sunshine Coast