Budget backlash: Here are the sore points of last night’s spending spree
There seems to be a lot of confusion and not many happy faces after the coalition government handed down its federal Budget last night.
While treasurer Josh Frydenberg claims the government coffers are back in the black, what he failed to point out was that the $7.1 billion surplus he mentioned relates to the 2019-20 financial year — not this financial year.
The government has also gone on an infrastructure spending spree as well as slashed taxes – but again most of it won’t come to fruition unless the coalition reclaims government after the May election.
That’s because a lot of the changes have to be passed through Parliament first, but now he has a federal Budget, Prime Minister Scott Morrison is set to call an election any day.
So that has meant this particular spending spree has drawn criticism from some that the current federal government is just trying to “buy votes”.
“This budget is a cynical attempt to buy votes instead of planning for the nation’s looming challenges,” Greens leader Dr Richard Di Natale said.
“What we needed was a plan to tackle the climate emergency through a real investment in renewables and a managed transition away from coal and other fossil fuels,” he said.
“What we needed was a plan to tackle growing inequality and to fund our essential services. Instead Scott Morrison and Josh Frydenberg have stuck their heads in the sand and delivered a few election bribes.”
The Greens are particularly miffed that the Morrison government is only committing $400,000 to a national electric vehicle strategy.
The Greens have been very vocal in the lead-up to the Budget delivery and election about how far behind Australia is when it comes to the uptake of electric vehicles.
“The Budget even has $11m earmarked for a luxury car rebate for tourist operators and primary producers,” Greens Senator Janet Rice said.
“This is 25 times more funding for people to buy luxury cars than for a national electric vehicle strategy.”
But it wasn’t all Liberal-bashing from the Greens; the party did suggest how the cash could be better spent.
Greens treasury spokesperson Peter Whish-Wilson said the tax cut and surplus in the Budget are worth $64.5 billion, which is enough to fully fund TAFE and free university education for all Australians, increase Newstart, build 500,000 new affordable homes, provide Medicare-funded dental care and invest $10 billion to fight climate change and still have billions to spare.
The Minerals Council of Australia welcomed the government’s greater investment in skills and training and encouragement of female STEM (science, technology, engineering and maths) participation.
The organisation also welcomed the new funding commitments for regional infrastructure because it will deliver improved freight routes, access to ports and airports.
But the sticking point for CEO Tania Constable was the biosecurity import levy — which is a tax on all shipped imports and exports.
“The government’s decision to retain the biosecurity import levy will penalise the mining industry and other sectors that create jobs in regional Australia by increasing costs on imported machinery and other goods,” Constable said.
While junior potash explorer Agrimin (ASX:AMN) is today thanking the federal government for its promise of $75m in funding for the Tanami Road in Western Australia, several state governments feel they have been royally ripped off.
The upgrade of the Tanami Road, which is part of the Alice Springs to Halls Creek corridor, is a key component of Agrimin’s planned logistics chain to connect its Mackay potash project to Wyndham Port.
The Budget promised $100 billion on infrastructure, but over the next decade.
“We lobbied the federal government extensively to get more money for Territory roads — such as the Tanami, Port Keats Road and Tiwi Islands — but we need work on these roads to start now, not in 10 years time,” Northern Territory treasurer Nicole Manison said.
“We also need these roads to be excluded from our GST or they are giving with one hand and taking with the other.”
The Victorian and Queensland governments also claim they have been left out in the cold when it comes to infrastructure.
Victorian treasurer Tim Pallas said Victoria’s share of national infrastructure funding from the Budget is only 17.7 per cent over the next five years, despite the state having more than 26 per cent of the population.
Among the funding allocations for Victoria is a $2 billion contribution to the fast rail link planned for between Melbourne and Geelong.
“While telling Victorians that construction on fast rail to Geelong will start within 18 months, not one cent is being made available for two years,” Pallas said.
“And for a $2 billion project, the Morrison government has allocated less than 5 per cent, with only $50m in the forward estimates.”
Queensland Premier Annastacia Palaszczuk, meanwhile, thought she’d point out the lack of times her state was mentioned in last night’s Budget.
“There were 4,077 words in last night’s budget speech,” she noted.
“The word ‘Queensland’ was used only once and then only in relation to the floods.
(The state got promises of over $300m as part of a flood recovery package.)
“But we heard plenty about Sydney and Melbourne and the vast sums of money lavished on those cities instead of ours.”
Palaszczuk was right, a scroll through the Budget measures revealed very little on infrastructure spend for Queensland.
The government committed $40m to a further five business cases for fast rail across New South Wales, Queensland and Victoria.
But minister for State Development, Manufacturing, Infrastructure and Planning, Cameron Dick, says Queensland only gets half of what New South Wales gets.
“The federal budget invests money in Wi-Fi for trains between Hornsby and Wyong in NSW but has no new money for urban rail in Queensland,” he said.
“Meanwhile, Queenslanders better get used to waiting for road funding, as new money won’t reach our state until 2022-23.”
Queensland will however get $10m towards the development of reliable and affordable energy infrastructure in north and central Queensland.
The state government was pretty much peeved at everything from education, to health, to training and skills.
Meanwhile, South Australia transport infrastructure advocate, the South Australian Freight Council, is also not happy with what its state is getting in the way of infrastructure cash.
SA Freight Council executive officer Evan Knapp said pre-budget announcements had again not made it into the forward estimates.
According to the council, transport infrastructure funding for South Australia will slide from $738.2m in the current financial year to $289.5m in 2021-22.
“None of the $2.7 billion for future North South Corridor works has made it into the forward estimates – not the $1.2 billion promised last year, or the additional $1.5 billion promised in the past few weeks,” Mr Knapp said.
“Only $48.2m of the promised $220m of Roads of Strategic Importance (ROSI) funding for the Eyre, Sturt and Goyder Highways is made available.
“Even under a 10-year funding scenario, we would have expected at least $88m.”
If it’s not Western Australia unhappy about how much of its GST contributions are funnelled to the rest of the country, it’s the Northern Territory now saying it has been duped.
NT treasurer Nicole Manison said the latest Budget had delivered the Territory another blow, with a further $75m reduction of GST.
She said this is on top of the $500m cut that is already having a major impact on the NT budget.
“This latest drop in the GST is another devastating blow to the budget and will put more pressure on important frontline services because the NT is heavily reliant on the GST compared with other states,” Manison said.
Western Australia has been pretty vocal about this topic in the past, but ever since the federal government said they would give the state more, not much has been said.
Around this time last year Prime Minister Scott Morrison revealed he was planning to overhaul the federal government’s research & development (R&D) tax incentive.
Under the current policy, companies with turnover of less than $20m can offset R&D costs and claim the amount back as a cash refund.
ASX small caps, particularly the tech guys, were hoping for two changes; first, to see funding for the incentive expanded, and also for some clarity around how large businesses can use it following last year’s shenanigans over CBA’s $100m R&D tax claim.
Neither of those things happened.
Instead, the pool of funding was reduced for the second straight year, and the government review into over-claiming was put on hold. In other words, everyone is now competing for a smaller pool of funds amid an environment of increased policy uncertainty.
Australia’s tech and startup community had plenty to say on the topic.
Junior miners are also not so happy with the government’s R&D policy.