This year’s budget builds on the Government’s focus on building economic resilience, national security and maintaining living standards against the backdrop of a higher inflation environment as the most significant impacts of the COVID-19 pandemic appear to have receded. Built on significant spending measures, the Government will incur a deficit of $78 billion for 2022-23, representing 3.4% of GDP and net debt is expected to peak at 33.1 during FY26 (significantly more than previous “redlines”).
The Government measures aimed at dealing with rising costs of living appear to be targeted and will involve a $1500 tax offset (an increase of $420 over the previous offset of $1080) and payments of $250 for those on the pension or disability payments.
The Government will also immediately halve the fuel excise (I.e. a reduction of about 22 cents per litre) for a period of 6 months which should assist businesses and households in the short-term.
The Budget has included important announcements relevant to the private capital industry which will help the sector and the businesses backed by investment. These include:
- Foreign investment: streamlining approvals by certain investors with the details yet to be published.
- Global Business/Talent: The Government will provide $19.5 million over 2 years from 2022-23 to continue the Global Business, Talent and Investment Taskforce, as the renamed Global Australia Taskforce, to attract talented individuals and international investment to Australia
- Skills and Talent: The government has broad range of measures to support employment participation and building Australia’s workforce including a National Skills Agreement with the States and Territories promising $3.7 billion over 5 years. The Government has also announced substantial funding for apprentices of over $1.3 billion over 5 years.
- Extension of the Patent Box Regimes: The government has broad range of measures to support employment participation and building Australia’s workforce including a National Skills Agreement with the States and Territories promising $3.7 billion over 5 years. The Government has also announced substantial funding for apprentices of over $1.3 billion over 5 years.
- REDSPICE (Resilience, Effects, Defence, Space, Intelligence, Cyber and Enablers) package: $9.9 billion has been committed in the Federal Budget to double the Australian Signals Directorate capability.
- Small business digital capability: The Government has announced a range of tax incentives to encourage small businesses (ie with a turnover of less than $50 million) to enhance their digital capability and training.
- University Research Commercialisation: The Government will provide $988.2 million over 5 years from 2021-22 (and around $325.1 million per year ongoing) to deliver reform package that will drive university-industry collaboration, workforce mobility and research translation and commercialisation. Most of these measures have previously been announced and include $295.2 million over 5 years from 2021-22 tp establish new research training pathways through new Industry PhDs and Fellowships, and deliver reforms to the Australian Research Council’s Linkage Program. The measures also include $37.4 million over 4 years from 2022-23 to establish CSIRO’s Research Translation Start program to take research from the lab into the market by building the entrepreneurial capacity of the research workforce with a focus on the National Manufacturing Priorities
- Employee Share Schemes: An overhaul of employee share schemes (ESS), to remove the regulatory cap on the value of shares issued to non-sophisticated investors and non-senior employees and replace it with a fixed cap that allows employees to acquire shares of a value of up $30,000 per annum rolled up to $150,000 over a 5 year period. We await the detail to be released as the Council has been constructively engaged over many months with Treasury. We would hope the valuable feedback that we have provided will be reflected in the legislation to be introduced as part of the Budget sittings as the Government intends for the measures to commence on 1 July 2022.
What is not in the Budget
The Council has reviewed the Budget Papers and disappointingly, many of the Council’s priorities which were not specifically addressed in the budget. The Council will continue to advocate for the introduction of a Limited Partnership Collective Investment Vehicle (CIV) and to ensure that that Venture Capital Limited Partnerships (VCLPs) and Early Stage Venture Capital Limited Partnership (ESVCLP) regimes generally remain globally competitive and that the outstanding technical and interpretive measures are addressed.
Further detail on these and other announcements in the 2022-23 Federal Budget which are relevant to the private capital industry and the business sector are detailed below.