Following the announcement of the 2020-2021 Federal Budget last night please find a link below to the tourism portfolio media release received from Senator the Hon Simon Birmingham, Minister for Trade, Tourism and Investment. An outline of measures that will benefit the tourism industry includes:
- $51 million Regional Tourism Recovery Initiative to support Australia’s most hard hit tourism regions;
- $50 million business events grants program to get events, conferences and trade shows up and running again;
- $200 million for a new round of the Building Better Regions fund, with $100 million specifically for tourism infrastructure to make our tourism regions more attractive and drive visitation;
- $231.6 million for Tourism Australia in 2020-21 to ramp-up domestic marketing campaigns and be strongly positioned to commence international marketing campaigns when the time is right, and
- $319 million for Australia’s parks and heritage areas to enhance the visitor experience at these iconic sites, whilst also providing an economic boost through job creation.
The Government’s response is now transitioning to ensure the Australian economy recovers strongly by targeting additional temporary support measures to boost household incomes, bring forward business and infrastructure investment activity, and drive the unemployment rate back down.
The JobMaker Plan will boost economic growth, create jobs, invest in our future industries and skills, remove red tape, guarantee essential services and restore confidence in a stronger recovery.
Measures that will support the tourism industry include:
- JobMaker Hiring Credit –incentivising businesses to take on additional employees aged between 16-35;
- Boosting apprenticeships commencement wage subsidy;
- More than 11 million Australians will get a tax cut back dated to 1 July, to get more money in people’s pockets to spend on things that matter to them, including domestic travel;
- Expanding the instant asset write-off meaning 99 per cent of businesses will be able to write off the full value of assets they purchase;
- A cash flow boost for companies with a turnover up to $5 billion by allowing them to temporarily, up to June 2022, offset tax losses against previous profits and tax paid in or after 2018-19 through a temporary loss carry back;
- Backing Business investment incentive allowing businesses worth a turnover of less than $500 million to deduct 50 per cent of the cost of eligible assets;
- An additional $14 billion in infrastructure investment, This investment is part of the Government’s record 10-year transport infrastructure investment pipeline which has been expanded to $110 billion;
- An additional 10,000 places for the Australian Small Business Advisory Services – Digital Solutions (ASBAS-DS) program, and
- The Government will refund or waive the visa application charge (VAC) for temporary visa holders affected by the COVID-19 travel ban.
- David Plank, Head of Australian Economics at ANZ made the following budget-related observations this morning:
- This budget heralds a change in tack from the Federal Government – when starting to ‘step back’ from providing direct government support, instead stimulating the private sector to spend and lead economic recovery, by spending more and employing more staff.
- The budget encourages the private sector to ‘do the heavy lifting,’ given tax incentives will only be afforded to businesses if they spend.
- This makes sense, given continued high levels of government spending provide an artificial view regarding the health of Australia’s economy.
- Businesses shouldn’t rely on this investment to lead them back to profitability. Many Australian businesses could instead focus on generating profitability through better productivity and adopting innovative practices.
- Inherent risks include the potential for businesses and households (given tax cuts) to save rather than spend any savings they are afforded. This would result in slower economic recovery.
- A ‘fiscal cliff’ will still need to be navigated across Q4 by businesses, as government incentive payments are wound back.
- Tax cuts have been bought forward from 2021/22 and will flow within a week or two. These measures will increase household disposable incomes.
- Tax concessions/write offs on business investment spending provide an enormous incentive for businesses to invest in new infrastructure projects, particularly given these are uncapped.
- Deficit projections (circa $214b projected to fall to $100b in 2021/22) are likely to be understated, while government revenue projections appear optimistic.
- Government’s objective will likely be to stabilise the debt ratio as a percentage of GDP – this is a more meaningful performance metric than the dollar value of the debt.
- Ultimately, the quantum of the deficit should be smaller than nominal year on year growth in GDP in Australia.
- Now is the ‘best time’ for a nation to run a deficit, given historically low interest rates, hence significantly lower debt repayment costs.
- A key metric will be to try and get national unemployment back below six (6) per cent by 2024. This will be challenging.
- Acknowledging the significant economic and social costs of youth unemployment, budget measures targeting apprentices and young workers are critical to get young people into work.
Of course, the above does not cover every measure. All budget measures and related fact sheets are available at budget.gov.au