On this basis, we give Treasurer Frydenberg a six out of 10.
There were several welcome policies that will give more incentives to work and help more people into training, both of which make it easier to do business.
The improved paid parental scheme will support workforce participation by giving parents more flexibility about how they split their work commitments and greater flexibility for young families.
When the apprenticeship wage subsidy comes to an end in the second half of this year, the Australian Apprenticeships Incentive System will be introduced to support apprentices in priority trades. Help for the most disadvantaged youth to find work will come from ReBoot and indigenous workers will benefit from a $636 million Rangers Program.
The technology investment boost will give $1 billion in tax relief over four years to small businesses that invest more in digital products and $550 million is available to help them upskill their employees. Reducing red tape for employee share schemes will make it easier for Australia’s budding technology companies to be globally competitive in attracting and retaining skilled employees.
Additional infrastructure commitments will all slowly add to the economy’s capacity reducing bottlenecks and travel times through grants to State and Territory governments.
Ultimately, in this budget, Australian businesses were stuck on the sidelines calling for game changing rules to tackle the very real challenges they face with supply blockages, a lack of skilled staff and a global economy that is decarbonising around us.
Cost of living dominates the agenda
The one-off $420 cost of living tax offset and $250 payment for those on income support adds up to $4.1 billion across the economy, and while it may seem like a large sum, it’s equivalent to what Australians spend on cafes, restaurants and takeaways in the space of a month.
Although the temporary cut to the fuel excise will lower the price of petrol and therefore inflation at the headline level, the savings will be spent elsewhere and we can’t see it having much of a deflationary impact.
That’s not to say supporting low-and-middle income households is bad policy. It’s a good way to deal with higher food and fuel prices while real wages are falling, and ensures most households are not left behind.
While businesses are likely to welcome this cash hand out, it could have been offset by tighter spending policy elsewhere so as to avoid making the RBA’s job harder.
Substantive tax reform goes missing again
We deduct a point for the absence of substantive tax reform to help give businesses confidence to invest as we shift gears from emergency COVID-19 settings. There are plenty of bad policies floating around from successive budgets that the government could cut.
As Ken Henry told us in 2009, the architecture of the tax and transfer system can have a major impact on our productivity and workforce participation. Policies that provide incentives to enhance international competitiveness, encourage investment in innovation and targeted incentives for critical and essential services such as health and sustainability projects, can encourage businesses to invest.
Measures to address housing affordability are similarly disappointing. While additional funding for affordable housing is welcome, much of the housing policy was limited to a few piece-meal demand side policies. The problem is that none of these measures address the supply problem at core of the housing affordability issue, a clear missed opportunity.
Limited support for decarbonisation initiatives
Despite broadening the patent box to low emissions tech, there was a missed opportunity for Australia to act now to future proof our economy. The policies fall short of those needed to drive investment in developing and implementing new technologies, commercialising research and development and maximizing Australia’s advantages in clean and new energy sources which could be a significant boost to our GDP as well as carbon proofing our economy.