What is in the $74bn JobMaker plan?

06/10/2020 - 23:49

Click through for a summary of initiatives in the $74 billion JobMaker package, including a $4 billion wage subsidy and $3.5 billion of research incentives.

There are dozens of initiatives in the $74 billion JobMaker package, announced in the federal budget last night. 

They are split under three categories.

The biggest portion of the package is intended to support aggregate demand, while the other priorities are loosely around workforce development and business incentives.

Stimulus

 

More than 11 million Australians will receive a tax cut backdated to July, Treasurer Josh Frydenberg said as he announced the budget last night.

The government's tax package will increase GDP by $9 billion in the 2022 financial year alone, according to budget papers.

"Australians will have more of their own money to spend on what matters to them, generating billions of dollars of economic activity and creating 50,000 new jobs," Mr Frydenberg said.

"It will help local businesses to keep their doors open and hire more staff.

"Lower- and middle-income earners will this year receive tax relief of up to $2,745 for singles, and up to $5,490 for dual income families compared with 2017-18."

Legislated changes to income tax brackets will be sped up, while a low and middle income tax offset of $1080 will be paid this year.

In the 2021 financial year, the threshold for the 32.5 per cent income tax rate will rise from $37,000 to $45,000.

The threshold for the next bracket, 37 per cent, will start at $120,000, up from $90,000.

CPA Australia general manager external affairs Jane Rennie said the association welcomed the tax cuts.

“Recovery is not just about government spending, but also about getting money back into the economy through individual spending and business investment – personal income tax cuts are critical to this,” Dr Rennie said.

“Many small businesses operate as sole traders and these tax cuts will help them with cash flow and put money back into their business. 

“Of course, tax cuts only provide effective stimulus to the extent that they translate to increased consumer spending.”

On water, the additional $2 billion will be added to an existing $1.5 billion fund to roll out priority water infrastructure over 10 years.

There are three other main infrastructure items under the JobMaker heading.

The Local Roads and Community Infrastructure program will allocate $1 billion for councils to upgrade roads, footpaths and street lighting, while a series of road safety projects will receive $2 billion.

About $14 billion of new and accelerated infrastructure projects have been announced since the start of the pandemic, according to budget documents.

In WA, new projects have included funding a 100MW battery in Kwinana, microgrids in regional areas and $75 million for a new Canning Bridge Bus Interchange.

“Funding for these shovel ready projects will be provided on a use it or lose it basis,” Mr Frydenberg said.

“If a state drags its feet, another state will get the money. 

“We need works to start, not stall.”

Workforce development

The hiring credit will pay an incentive to businesses taking on employees between 16 and 35 years old, with 450,000 positions intended to be filled.

For new hires working more than 20 hours a week, it will pay $200 a week for employees under 30, and $100 per week for those between 30 and 35.

"To be eligible, the employee must have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one of the previous three months at the time of hiring," budget documents said.

"The JobMaker Hiring Credit will be paid quarterly in arrears.

"Employers can claim the first payment when claims open on 1 February 2021 (for new jobs created between 7 October 2020 and 6 January 2021)."

In addition, the $1.2 billion apprenticeships package will support 100,000 new apprentices.

About 50,000 students will be funded for short courses in higher education, with an additional 30,000 university places.

For women, $240 million will fund new cadetships and apprenticeships in STEM subjects, safety at work and working from home initiatives, and entrepreneurialism. 

The Association of Mining & Exploration Companies said it was a bold budget.

“The $4 billion Job Maker Hiring Credit will help lift Australians off JobSeeker into employment, by partially subsidising employers engaging young Australians and helping transition away from JobSeeker over time,” AMEC chief executive Warren Pearce said.

Business support

  • R&D Tax Incentive $2bn
  • Modern Manufacturing Strategy $1.5bn
  • Research Package $1,067m
  • New energy technologies $537m
  • CSIRO $459m
  • Digital Business Plan $377m
  • Congestion reduction for agricultural exporters $328m
  • Securing fuel supply $232m
  • Deregulation Package $86m
  • Gas-fired recovery $53m
  • Simplified trade system $36m
  • Business and talent attraction taskforce $30m
  • Improving energy affordability and reliability $30m

The government will increase the refundable R&D tax offset for small businesses with turnover below $20 million to be 18.5 per cent above the businesses corporate tax rate.

There will be no cap on refunds.

For bigger businesses, the system will shift from three to two tiers, depending on R&D intensity.

The manufacturing strategy was announced earlier this month and will target six industries.

Those comprise food and beverages; resources technology and critical minerals processing; medical products; recycling and clean energy; the defence industry; and space industry.

About $1.3 billion of the manufacturing package will be used to invest in manufacturers to build scale, commercialise their ideas and connect to global supply chains.

A further $107 million is allocated to address supply chain vulnerabilities for key products.

“The $1.5 billion Modern Manufacturing Strategy will support Australian manufacturers to scale up in six priority areas, including resources technology and critical minerals processing, recycling and clean energy," AMEC chief executive Warren Pearce said.

“$2 billion of new incentives (see below) will also spur greater investment in research and development and reverse last year’s shock decision to cut back on R&D, assisting mining companies looking for opportunities to value add, and helping Australia realise greater value from its minerals.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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