Federal budget 2019/20 and impact on property

Delivered in the shadow of an election, the 2019/20 federal budget was always going offer more sweeteners than tough decisions. This year’s budget headlines ‘a return to surplus’, while major personal tax cuts and large infrastructure projects make up the policy position of the government moving forward.

However, given the new measures outlined will not be debated or legislated before the federal election campaign next month, the biggest question is how relevant is this budget to Australians?

Property market affects

There was no announcements, changes or incentives that will directly affect homeowners, real estate investors or the property industry in general. That said, personal and small business tax cuts will assist with cost of living pressures, consumer spending and businesses to invest.

Indirectly, major road and rail infrastructure projects, hospital upgrades and drought assistance funding will provide significant uplift to regional towns and communities. This will help support businesses and jobs in these areas which will in-turn strengthen local economies.

The bottom line – back in surplus (next year)

After more than a decade, the federal budget is forecast to finally returned to surplus in the coming financial year. A budget surplus of $7.1 billion is expected for 2019/20 rising to surpluses of $11 billion and $17.8 billion in 2020/21 and 2021/22 respectively. The economic indicators contained in the budget provide a positive snapshot of the Australian economy with the unemployment rate expected to remain at 5% and GDP growth of 2.75% over the next two financial year.

Personal tax cuts brought forward

Similar to last year, the centre piece of this year’s budget is a restructuring of the personal income tax thresholds, although this will not occur until 2024/25. That said, an immediate lifting of the low-to-middle income tax offset (LMITO) will help households this year, providing a tax reduction in 2018/19 FY of up to $1,080 for singles and $2,160 for dual income families.

Small businesses have double win

A budget measure which will take effect immediately is an increase in the small business instant asset write-off threshold, which will be lifted to $30,000 and expanded to include businesses with a turnover of $50 million. In addition, businesses with a turnover of less than $50 million will have their tax rate lowered to 25% by 2021/22.

• Budget surplus of $7.1b expected in 2019/20, rising to $17.8b in 2021/22
• The low-to-middle income tax offset is to be lifted immediately providing a tax relief of up to $1,080 for singles and $2,160 for households
• Reduction of the 32.5% personal tax bracket to 30% by 2024/25
• The small business instant asset write-off threshold will be lifted to $30,000 for businesses with a turnover of up to $50 million
• $100 billion infrastructure spending over 10 years, including a $2.2 billion new road safety package
• $2 billion for a fast rail line from Geelong to Melbourne and the establishment of the National Faster Rail Agency

Infrastructure

New infrastructure helps reduce commute times, increases productivity, boosts local employment opportunities and makes outer-ring suburbs more accessible and attractive. Positively, spending on infrastructure will total $100 billion over ten years with the 2019/20 Federal Budget focusing on a number of fast rail projects, road safety projects and highway upgrades with the biggest beneficiary being regional Australia.

Fast rail

• $2 billion has been allocated to help deliver fast rail from Melbourne to Geelong
• A new $14.5 million National Faster Rail Agency will be established to undertake business cases and deliver projects across the country. These include Sydney to Wollongong, Sydney to Parkes, Melbourne to Albury Wodonga, Melbourne to Traralgon, Brisbane to the Gold Coast, Sydney to Newcastle, Melbourne to Greater Shepparton, and Brisbane to Sunshine Coast

Major road

• $2.2 billion for a Road Safety Package which include $1.1 billion for maintenance and repairs, $550 million funding for the Black Spots Program and $571 million for bridge renewals and safety including heavy vehicles
• An increase in the Urban Congestion Fund to $4 billion to target congestion in some of the worst affected urban areas. This includes $500 million to establish the Commuter Car Park Fund which will allow more people to park
• Roads of Strategic Importance funding has been increased by $1 billion to $4.5 billion

Major projects by State

NSW

• $3.5 billion for the first stage of the Western Sydney North South Rail Link
• $1.6 billion for the M1 Pacific Motorway Extension to Raymond Terrace
• $500 million for the Princess Highway upgrade
• $405 million in funding for the M12 Motorway

VIC

• $1.1 billion for upgrades to south eastern and northern suburban roads in Melbourne
• $700 million for Stages 2 and 3 of the South Geelong to Waurn Ponds Rail Upgrade
• $360 million for the Western Highway final stage duplication from Ararat to Stawell
• $300 million for sealing roads in the Dandenong Ranges and surrounding regions
• $208 million for Stage 1 of the Shepparton Bypass on the Goulburn Valley Highway

QLD

• $800 million for the Gateway Motorway extension from Bracken Ridge to Pine River
• $500 million for the M1 Upgrade program, including Daisy Hill to the Logan Motorway
• $320 million for Warrego Highway upgrades between Ipswich and Toowoomba
• $254 million for the Mt Isa to Rockhampton corridor
• $200 million for the Tennant Creek to Townsville corridor

WA

• $348.5 million for Tonkin Highway upgrades
• $207.5 million for the Oats Street, Welshpool Road and Mint Street Level Crossing Removals
• $140 million for the Albany Ring Road
• Additional $121.6 million for the Bunbury Outer Ring Road
• $115 million for the upgrade of the Fremantle Traffic Bridge
• $248 million for the Karratha to Tom Price corridor

SA

• $1.5 billion for the North-South corridor
• $259.8 million for a South Australian Rural Roads Package, including:
• $115.5 million for the Torrens Road Level Crossing
• $100 million for the Port Augusta to Perth corridor

ACT

• $30 million for the Kings Highway corridor
• $20 million for the duplication of William Slim Drive, Belconnen

NT

• $162.3 million for the Alice Springs to Darwin corridor
• $160 million for the Alice Springs to Halls Creek corridor