2021 Federal Budget: What It Means For You
As many Australians anxiously held their breath for the release of this year's federal budget, who have been crowned the winners and losers for 2021?
Click here to download our breakdown of what the 2021 means for you and your business.
While the release of the annual budget is always a major milestone that reaches all corners of the Australian political and economic landscape, it's arguably never had so much riding on it. Although the government has faced slightly less pressure when compared to last year’s version, Australia's economic rebound from the COVID-19 pandemic has given those in power slightly more money to play with than what was initially forecasted.
While the Liberal Party have spent decades marketing themselves as frugal spenders and the best option for keeping our national deficit at a manageable level, this year’s federal budget has all but abandoned the concept of a surplus in favour of spending big - but who’s getting what, and is it enough to keep the Australian economy afloat?
Deciphering The 2021 Federal Budget
Despite Treasurer Josh Frydenberg touting Australian’s economic engine as “roaring back to life”, the unprecedented levels of spending seen in this year’s budget will leave a legacy that’s set to peak in 2025, via a national deficit of close to $1 trillion dollars - or a whopping 40.9% of our GDP.
Depending on who you ask, this year’s federal budget is either regarded as the “pandemic budget” or the “women's budget”. However, political reporters have all but scoffed at both of these titles, and have even gone so far as to state that the Coalition is simply putting money back into public services that have seen extensive cuts for years, touting already legislated tax cuts, and essentially doing their best to appeal to voters from all walks of life.
Regardless of your voting preferences for the looming federal election, who exactly are deemed to be the real winners and losers from this year’s budget recap?
Winner: Aged Care - The government is putting an extra $17.7 billion toward aged care over five years, or roughly $3.5 billion a year. While it's a significant boost, it's worth noting that the royal commission into aged care declared the sector was underfunded by around $10 billion a year. Respite care and support services will also receive $798 million over the next five years.
Winner: Business - As well as the support announced for particular industries like small brewers, video gaming and medical and biotech start-ups, other perks for business include last year's business write-off perks being extended for another twelve months. That means those with a turnover of up to $5 billion will be able to write off the full value of any eligible asset.
Winner: Low And Middle Income Earners - Tax relief for 10.2 million people will be delivered through a $7.8 billion extension to the low and middle income tax offset. This is worth a maximum of $1080 for individuals and $2160 for couples, with the maximum benefits expected to flow to people earning between $48,000 and $90,000 per year.
Winner: Women - In addition to changes to the childcare subsidy, the government's tipping in $354 million for women's health. It's also putting $998 million over the next four years towards reducing domestic violence. To help women when they retire, the government will now make it so that employees who earn less than $450 a month will be paid the superannuation guarantee.
Loser: Universities - While small-phased programs to fly international students into the country will start later this year with numbers to increase over 2022, there’s no extra funding for the sector that lost huge amounts of revenue usually derived from international students. Course funding changes will also see domestic revenue decline.
Loser: Tourism - While the government announced just under $60 million in last year's budget to help tourism businesses diversify their markets, there's little extra support this year. With the borders now expected to stay firmly shut until at least mid 2022, it’s not good news for those who rely on international markets for survival.
Loser: Renewables - With the exception being $30 million over the next year for a big battery and microgrid project between Katherine and Darwin in the Northern Territory, there’s not a lot of love in the budget for investing in renewable energy tactics in an effort to reduce Australia’s carbon footprint. For now, it would seem that the Coalitions love of coal is set to continue.
Loser: The Next Generation - Quite arguably, the biggest losers in this year’s federal budget may not even have been born yet. Australia’s strong health and economic response to the pandemic has come at an enormous cost, with the 2020-2021 deficit being revised down by $52.7 billion to $161 billion. In a nutshell, it will take years, if not decades, to financially recover.
While this year’s budget recap has consciously made an effort to cover an enormous variety of sectors, industries and individuals in Australia, other notable mentions who made the cut in the budget include first home buyers, mental health, child care, farmers and the National Disability Insurance Scheme (NDIS). As ever, it’s impossible to please everyone, but for now it would seem that the Coalition are doing their best to give it a red hot crack all the same.
Sourcing Help With Your Business Finances In 2021
Whether you’re starting a business, purchasing an existing one, or even reevaluating where your current enterprise stands - all require some form of financial know-how if you hope to successfully navigate your legal tax requirements as well as hitting your financial and business goals.
However, if understanding the legalities that surround your business or finances isn’t your strong point, then it may be reassuring to know that you’re not alone. In fact, many businesses (big and small) enlist the services of an accountant in order to free up their time while knowing that their financial obligations are already taken care of by the professionals.