After having been derailed and postponed due to COVID-19, this evening Treasurer Josh Frydenberg is set to unveil his plan to help the Australian economy recover from supporting its citizens through the pandemic, explaining how the government intends to create jobs and infuse money into the system while continuing to ease the burden for struggling Australians on a more personal level.
The content of this evening’s 2020 Federal Budget is critically important, as more than half the Australian population has indicated they are more concerned about the state of their finances than they are about contracting COVID-19 over the next three months, according to new research from comparison site Canstar.
“Many businesses and individuals are still looking down the scope to the approaching end of JobKeeper, loan repayment pauses and the insolvent trading moratorium, and fearing what could be ahead over the next six months,” explained Steve Mickenbecker, Canstar group executive of financial services.
“Lenders have already provided encouragement to new borrowers and relief for refinancers, with 22 lenders cutting variable rates for new lending in September. But interest rate cuts have been banked rather than spent, as people build a contingency buffer into their household budget.
“Government spending initiatives and business investment incentives are needed to directly lift spending, and sustainably create jobs and bolster growth.”
For Loan Market executive chairman Sam White, small business incentives and bringing forward income tax cuts sit atop his “wishlist” for the 2020 budget.
“While JobKeeper has been wound back, it would be great to see incentives for small business owners to not only retain existing workers, but employ new ones to increase output,” White said.
As such, the aggregator is hoping to see an extension of the Job Trainer program beyond March 31 to this time next year, thus enabling small business owners – including brokers – to employ more support staff and grow the economy faster.
Further, while the federal government has already legislated changes to Australia’s tax brackets, raising the top threshold of the 19% bracket from $37,000 to $45,000 and increasing the 37% payable bracket from $90,000 to $120,000, the adjustments aren’t set to go into effect until 1 July 2022; White hopes Treasurer Frydenberg is willing to move this date forward.
“Few workers in the economy will be fortunate to receive wage increases over the coming 12 months,” he said.
“Bringing forward the legislated changes to the tax brackets by 12 months would be an investment in Australia’s wider economic recovery and leave us less reliant on commodities like iron ore.”
Yanir Yakutiel, CEO and founder of fintech lender Lumi, also expressed hope the 2020 budget might use tax reform as a tool to breathe life back into the economy.
“I’m hoping to see a more structured approach from the government to support the economy which includes continued stimulus to support households and businesses, whether that is in the same form as the current COVID-19 measures like JobKeeper and JobSeeker, or implementing something new,” he explained.
“This could be reform to the tax system to increase cash flow for small businesses, support to lower the cost of hiring staff, or reducing regulations to kickstart initiatives.”
The CEO also voiced certain industry-specific desires, such as the continued relaxation of regulations on financial services such as the lending laws.
“These changes are going to make it easier for non-banks and non-ADI lenders to access capital and make commercial banking easier,” he said.
More information to come upon the budget’s release