The federal government is ramping up tax relief for businesses while pumping investment into a range of digital initiatives and infrastructure projects amid efforts to jump-start the pandemic-hit economy.
Australia’s 2020-21 Budget was handed down on 6 October by federal Treasurer Josh Frydenberg, committing a further $98 billion on top of the $257 billion it has already directly pumped into economic support aimed at cushioning the blow of COVID-19 and strengthening the nation’s recovery from the pandemic.
The new funding includes $25 billion in direct COVID-19 response measures and $74 billion in new measures to create jobs.
Tax breaks for business
Measures aimed at helping to buoy Australia’s economy in the face of the pandemic include a move to further expand its instant asset write-off tax break initiative for businesses, which was extended earlier this year. Now, the government will allow 99 per cent of businesses to write off the full value of assets they purchase.
Businesses with a turnover of up to $5 billion will be able to immediately deduct the full cost of eligible depreciable assets acquired from 6 October 2020 and first used or installed by 30 June 2022.
According to Frydenberg, this will unlock investment, expand the productive capacity of the nation and create tens of thousands of jobs.
The government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid.
At the same time, the government is providing $105 million in tax relief to expand access to a range of small business tax concessions by lifting the aggregated annual turnover threshold for these concessions.
Businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to 10 small business tax concessions.
The expanded concessions will apply in three phases, with the first phase starting from 1 July 2020. The changes will reduce red tape and support around 20,000 businesses to attract workers and retain jobs, the government claimed.
The federal government will also enhance previously announced reforms to invest an additional $2 billion through its Research and Development Tax Incentive.
These changes will commence from 1 July 2021 and are expected to help more than 11,400 companies that invest in research and development to create the jobs of today and tomorrow.
A focus on jobs
Meanwhile, the government’s new $4 billion JobMaker Hiring Credit initiative will be payable for up to 12 months for each new job and is available from 7 October to employers who hire eligible employees aged 16-35.
The Hiring Credit will be paid quarterly in arrears at the rate of $200 per week for those aged between 16-29, and $100 per week for those aged between 30-35. Eligible employees are required to work a minimum of 20 hours per week.
To be eligible, employers will need to demonstrate an increase in overall employee headcount and payroll for each additional new position created. Treasury estimates that this will support around 450,000 jobs for young people, the government said.
Investment in digital technology
On the Commonwealth tech project front, the government continues to focus on streamlining and modernising the systems that support the Australian welfare service delivery system to “ensure they have the agility to support the needs of Australians going forward”.
With this in mind, the government has allocated $539.6 million to complete the fourth stage of the seven-year build of the Welfare Payment Infrastructure Transformation (WPIT) program which, when it was first announced, was tipped to exceed the $1 billion mark.
The fourth phase of the project will see the build of modern payments and decision-making platforms, including a new Entitlement Calculation Engine (ECE), which will enable faster claims processing for Australians, ensure accuracy of payments and, combined with Single Touch Payroll, reduce the reporting burden for individuals and businesses dealing with government.
At the same time, the government has allocated $256.6 million as part of the Digital Business Plan to make Digital Identity – the digital equivalent of a 100 point ID check – available as a whole of economy solution.
With a consistent, aligned approach across the Federation, Digital Identity is designed to make it easier and quicker for Australians to prove who they are and spend less time dealing with red tape and more focused on the return to prosperity and growth.
Ramping up connectivity
Meanwhile, as part of the previously announced JobMaker Digital Business Plan, the government is investing $29.3 million to improve the allocation and management of spectrum and trial 5G use across different industry sectors.
This includes $22.1 million to establish the Australian 5G Innovation Initiative, to invest in 5G commercial trials and testbeds in key industry sectors such as agriculture, mining, logistics and manufacturing.
In addition, $7.2 million will be spent over two years to the communications regulator, the Australian Communications and Media Authority (ACMA), to invest in systems that allow more efficient spectrum allocation and simplify the digital spectrum licence system.
Moreover, an additional $30.3 million in funding will go to the Regional Connectivity Program to improve connectivity in regional and remote Australia. This additional funding means there is now up to $83.0 million available under the program for projects to improve connectivity outside of the National Broadband Network (NBN) fixed-line footprint.
The Regional Connectivity Program is part of the government’s broader investment in regional telecommunications. The program will target investment in telecommunications infrastructure projects which target local priorities and maximise economic opportunities and social benefits for regional, rural and remote areas.
Following a feasibility study, the government is also providing up to $1.8 million in grant funding for wireless internet service providers to improve connectivity in the Western Australia Grainbelt.
The increased and improved digital connectivity is aimed at supporting long-term productivity in agricultural industries and assisting in recovery from the impacts of COVID-19 restrictions.
The program will provide grant funding to co-fund place-based fixed wireless connectivity solutions tailored to the needs of local communities in the region, enabling the delivery of improved connectivity to under-served areas.
The government reiterated its approval of NBN Co’s latest corporate plan, under which the National Broadband Network builder will invest $4.5 billion to bring ultra-fast broadband to millions of families and businesses.
This investment will be financed through NBN Co borrowing in the private sector debt markets.
As previously announced, the network investment plan includes $3.5 billion to make NBN Co's highest wholesale speed tiers available, on demand, to up to 75 per cent of homes and businesses on the fixed-line network by 2023.
Additionally, NBN Co will invest $700 million to enable nine in 10 businesses to order high-speed fibre broadband at no upfront cost as NBN Co rolls out 240 Business Fibre Zones nationwide.
NBN Co has also set aside $300 million of co-investment funding for NBN Co to partner with governments and local councils to further improve broadband services in regional Australia.
The tech industry reacts
The local tech industry has, predictably, already provided some of its views on the latest federal Budget, with Michael Alp, vice president, Australia and New Zealand, at Pure Storage, noting that the government’s move to adopt and transition to digital technologies as part of its $800 million Digital Business Plan package is needed to keep Australians safe and supported.
“As progressive as we have been in the past, there are many layers of infrastructure and process under threat of attack, obsolescence or growing cost,” Alp said. “At the heart of this is the data of our people, land and businesses which needs to be safe, adaptable and usable by our core agencies. It's the greatest asset of our government for preserving our identity, way of life, security and standard of living.”
Digital Realty Asia Pacific managing director Mark Smith, meanwhile, said that the additional rollout of 5G mobile services will create a high speed platform for business operations to take complete advantage of big data, artificial intelligence and the internet of things.
“The government’s move to boost 5G access will help provide critical connectivity and infrastructure to local enterprises, particularly when demand on internet infrastructure is so high. A cloud-first strategy – whether multi-cloud or agnostic – is crucial to capitalise on a faster 5G network ensuring businesses can compete,” Smith said.
BlueAPACHE managing director Chris Marshall said that the government’s decision to invest in Australia’s digital future will work to further accelerate cloud adoption among businesses of all sizes and encourage organisations to completely rethink their approach to technology.
“Right now, with workforces distributed, there's an urgent need to harness emerging devices, software and services while at the same time extracting maximum value from existing investments,” Marshall said. “Gone are the days where an organisation's IT department could design and build systems based on clear, five-year plans.
“The luxury of having the time to scope out requirements, assess a range of vendors, test and then deploy company-wide systems is no longer available. Any organisation that believes it can confidently plan more than two years ahead is likely to be misguided.
“Faced with constantly changing customer demands and a rapidly evolving competitive landscape, an organisation’s technology infrastructure must be able to change just as quickly,” he added. “In the era of the post-pandemic empowered customer, the end game is to know what your customers want, before they know they want it. This budget will support companies to innovate and rapidly evolve so that they can become more agile and even more customer obsessed.”
For Joanne Wong, APAC vice president of international marketing at LogRhythm, the government’s focus on digital project investment, which builds on its previously announced ten year investment strategy in cyber security, is to be applauded.
“Australia will also be in a much better position to tackle the IT security issues that will continue to increase in coming years,” Wong said. “Indeed, the government’s zeal should now spur company management within businesses of all sizes grappling with a remote workforce and uncertain market conditions to take a proactive approach and review their cyber security hygiene.
“This will benefit employees and customers of organisations who will want to know that management have the latest technology in place which can detect threats and help quickly remediate attempted attacks if they do happen,” she said.