The Australian government's 2016 federal budget is the latest step in transitioning the nation's economy from one heavily reliant on mining and resources to one spread across innovation, ideas and Australian-owned businesses.
Tax breaks for small to medium-sized businesses, tax cuts for Australia's upper-middle class, encouraging "jobs and growth" and investment in innovation are the highlights of Treasurer Scott Morrison's address to Parliament overnight in a package Prime Minister Malcolm Turnbull described not as a budget but as a "careful economic plan".
Senior political commentators in Canberra said it was a "sober" and "boring" announcement intended to regain the faith of Australian voters after the "horror" coalition budget of 2014. "While it won't get anyone excited and people will have forgotten most of the detail by the election, I think Scott Morrison has created the right impression," the Nine Network's political editor Laurie Oakes said on Wednesday.
Underpinning the prime minister's vision for a local "ideas boom" to propel the Australian economy into the 21st century, the government will shift the tax burden from local businesses to tax- shirking multinational companies, with a major taskforce announced to ensure they are paying their "fair share" of tax in Australia.
Overall, company tax rates will be lowered over a number of years to ensure a competitive rate with other OECD nations as Australia currently has the seventh- highest corporate tax rate in the developed world.
Under Morrison's budget, that rate will be reduced from up to 30 to 25 percent by 2026, a change that is designed to help Australian businesses become more competitive in the world market. Across the board, from small to large business, tax rates would eventually align at 25 percent, with the first gradual cut to be imposed on July 1, 2017.
The Treasurer's focus on local jobs and company growth means that Australian business, particularly small business, is more likely to reinvest their earnings and more likely to be Australian owned.
Not only will the tax cuts contribute to Australia's gross domestic product (GDP) which, under Treasury modelling, would rise by 1 percent per year but it will allow Australian business to reinvest in themselves to set up bigger operations so they might export overseas.
Earlier this year, the government signed a major free-trade deal with China, its third after similar deals with South Korea and Japan, which has reduced tariffs on a wide number of Australian products set for overseas export.
The tax breaks, combined with the formulation of a 500 million U.S dollar tax avoidance taskforce (to target overseas companies which avoid paying tax in Australia) and the coincidental timing of the China-Australia Free Trade Agreement (ChAFTA) have created the perfect environment for Australian businesses to open themselves up to the world.
The cuts affect up to 870,000 small and medium-sized businesses while, in turn, income tax cuts for medium to high income earners will further free up funds for Australians to reinvest in the Australian economy.
Former Australian PM John Howard said the Treasurer had put Australia first in the 2016 budget, and praised the forward thinking that, according to the coalition, would bring the 28 billion U.S dollar budget deficit back into surplus after the end of the decade.
"I think Scott Morrison did a very good job of juggling the politics and the economics last night," Howard told News Corp on Wednesday. Despite the government's aim to diversify and boost the Australian economy, the "responsible" budget did draw criticism.
Green groups and the Opposition lamented the lack of commitment to the environment, with little money set aside for protecting at- risk environmental icons such as the Great Barrier Reef, which has suffered enormous coral bleaching in the past two decades.
The Opposition also accused the government of "ripping billions (of dollars) from health" while Opposition Leader Bill Shorten said the budget "favors the millionaires".
The tax concessions are predominately helping business owners who are considered well-off, but the Treasurer has specified that cuts to business allows reinvestment in Australia, which in turn boosts the broader economy.
Smokers will also fund a number of the government's future ventures, with a tobacco excise to result in cigarette packets now costing 32 U.S dollars, while higher education reform has been put on the backburner after a disastrous 2014 budget, when then-Prime Minister Tony Abbott announced billions of dollars in cuts to higher education and the controversial deregulation of university fees. Also unaddressed in favor of broader economic reform was the nation's housing affordability crisis and negative gearing.
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