Commitment to science and R&D fundamentals missing in Budget
Professionals Australia welcomed the infrastructure spending on roads, rail and renewables, the apprenticeships package and sham contracting and labour hire initiatives announced in last night’s Budget but remains concerned about the lack of further funding commitments to science and R&D.
Professionals Australia CEO Chris Walton said “While we welcome the funding to increase women’s participation in STEM, investment in our national space capability and additional funding for ANSTO, the fact is that the impacts of the $328 million cuts to research rolled out by Tony Abbott in 2014 are still being felt. The latest OECD figures put the nation’s R&D spending as a proportion of GDP well below the OECD average of 2.38 per cent at 1.88 percent. One in five science jobs in public agencies have been lost as a result of and since those cuts.
“We’re pleased that the Federal Government has reaffirmed its commitment to building the Medical Research Future Fund to $20 billion by 2020-21 but the bigger picture is that we need both education and research properly funded so they can play the critical nation-building role they can and should. We are concerned about the reallocation of $3.9 billion from the Education Investment Fund to an Emergency Response Fund and the Government’s $2.1bn freeze on student places remains in place with the potential to seriously impact access to university places for disadvantaged and under-represented groups,” he said. “We need to position the education system to build the nation’s STEM skills base – allocating education funds elsewhere is false economy at its worst. We need a decently-funded education system to contribute to long-term economic and social benefits for Australia and job opportunities for Australians. We need predictability in the system to allow long-term planning and investment.
“And of course the Government’s Innovation Agenda is again conspicuous by its absence – the big picture commitment to supporting the innovation system has been put in the too hard basket. We need a clear long-term strategy for innovation, science and R&D that emphasises engagement and collaboration between business, government and universities. We need Government to recognise the critical role that funding science and R&D plays in delivering economic growth and job creation, as well as the key role public funding plays in encouraging business investment in R&D.”
On 2 April 2019, Treasurer Josh Frydenberg handed down the 2019-20 Federal Budget that focused on returning the budget to surplus, providing personal tax cuts, delivering road and infrastructure projects and providing improved health and aged care. The Coalition produced a better than expected surplus for the 2019-20 financial year of $7.1 billion (previously forecast as $4.1 billion in the Mid-Year Economic and Fiscal Outlook projections) largely due to the revenue flowing into the budget from higher iron ore prices. Surpluses are projected to increase to $11 billion in 2020-21 and $17.8 billion in 2021-22 before easing to $9.2 billion in 2022-23. Wage growth is forecast to be 2.75 per cent,
Science, R&D and innovation system funding
The Government’s Budget allocations towards science, R&D and innovation include:
- $19.5 million investment over four years into the national Space Infrastructure Fund. This includes allocations of $2 million for the delivery of space manufacturing capability in New South Wales and $6 million for the Mission Control Centre in South Australia.
- Improving STEM Gender Equity in Australia – the Government will provide $3.4 million over four years from 2020-21 for women in STEM programs. The funding will support an extension of SAGE for an additional three years, and a digital content National Awareness Raising Initiative, led by the Women in STEM Ambassador.
- $15.1 million over three years to expand Questacon’s educational programs.
- $56.4 million over three years from 2019-20 (including $31.9 million in capital funding) to ANSTO to support nuclear medicine and nuclear decommissioning activities and asset management.
There are no changes or additional funding allocated to medical research funding through the NHMRC Medical Research Endowment Account, the Australian Research Council, for NCRIS or the CRC program. The capitalisation of the Medical Research Future Fund remains on track with the Government continuing its commitment to fully fund the MRFF to $20 billion by 2020-21. There are no new initiatives or allocations attributed to the National Innovation Strategy.
The Government made a range of IT commitments in the Budget including the following:
- $10.8 million over two years to the Australia Electoral Commission to upgrade core ICT infrastructure and deploy new polling place technology.
- $11.7 million over four years (and $2.2 million per year ongoing) to improve the Commonwealth Grants Commission’s ICT capacity to ultimately support better distributed of GST revenues.
- $1 million to the Department of Human Services in 2018-19 to implement e-invoicing.
- $82.4 million over four years from 2019-20 (including capital funding of $16.0 million over four years from 2019-20) to be provided to the ATO and the Department of Veterans’ Affairs to support the expansion of ATO collected data and its use by Commonwealth agencies.
Education and training
The Budget announced a new $525 million skills package seeking to create 80,000 new apprenticeships over 5 years in industries with skills shortages. The Government will double incentive payments to employers to $8,000 per placement. These new apprentices will also receive a $2,000 incentive payment. This payment will provide:
- employers a total of $4,000 ($2,000 after 12 months and $2,000 at completion), in addition to the existing standard employer incentives of $1,500 at commencement and $2,500 at completion of an apprenticeship.
- apprentices a total of $2,000 ($1,000 after 12 months and $1,000 at completion).
The Budget included funding for 10 new training hubs connecting schools, local industries and young people in regional areas with high youth unemployment.
Other education announcements included:
- $62 million allocation to second chance literacy, numeracy and digital skills for at-risk workers, including four separate pilots for programs tailored to remote Indigenous communities.
- $453 million over two years from 2019-20 to extend the provision of 15 hours of preschool through to 2021, including $1.4 million to develop strategies to increase preschool attendance among disadvantaged and Indigenous students.
- $30.2 million in 2019-20 for a Local School Community Fund, with local schools to identify their own priorities.
- $19.7 million over the next four years for schools for various arts and life education programs, including theatre, music, preventative health and the constitution.
The Government has committed to $23 billion of infrastructure spending in the 2019-20 Budget with total Government spending on infrastructure over the next decade exceeding $100 billion. National initiatives in infrastructure spending include the following:
Roads and rail
- $2.2 billion to local and state governments under the Road Safety Package. This will include investments of $550 million to fund the continuation of the Black Spot Program, $275 million for the Heavy Vehicle Safety and Productivity Program and $275 million for the Bridges Renewal Program.
- $3 billion increase in the Urban Congestion Fund to a total of $4 billion. It will also include $500 million in funding to establish a Commuter Car Park Fund to improve accessibility to rail and public transport networks around the country.
- $1 billion increase in funding the Roads for Strategic Importance program to a total investment of $4.5 billion.
- $200 million in additional funding to the Building Better Regions Fund.
- $22.7 million of additional funding to the Stronger Communities Program which provides cash incentives to community organisations to invest in capital projects that contribute to regional infrastructure development projects.
The government has also announced a national fast rail strategy. The Fast Rail Plan includes the following federal investment:
- $2 billion investment in the development of a fast rail network between Melbourne and Geelong.
- $14.5 million to establish the National Faster Rail Agency to explore fast rail links between rural/regional and city destinations.
The major state projects that received funding are as follows:
New South Wales – $7.3 billion which includes the following projects:
$1.6 billion for the M1 Pacific Motorway extension to Raymond Terrace.
$3.5 billion for Western Sydney Rail.
$500 million for upgrading the Princess Highway.
$254 million for the Urban Congestion Fund – $496 million for the Roads of Strategic Importance.
Victoria – $6.2 billion which includes the following projects:
$1.1 billion for the south eastern and northern roads under the Suburban Roads Upgrades scheme.
$700 million for the South Geelong to Waurn Ponds rail upgrade.
$360 million for the Western Highway upgrade from Ararat to Stawell.
$396 million for the Urban Congestion Fund.
$490 million for the Roads of Strategic Importance.
Queensland – $4 billion which includes the following projects:
$425 million for the Bruce Highway.
$320 million for the Warrego Highway.
$800 million for the Gateway Motorway from Bracken to Pine River.
$379 million for the Urban Congestion Fund.
$824 million for the Roads of Strategic Importance (North) – $186 million for the Roads of Strategic Importance (South).
South Australia – $2.6 billion which includes the following projects:
$1.5 billion for the North-South Corridor.
$260 million for the SA Regional Roads Package.
$341 million for the Urban Congestion Fund – $220 million for the Roads of Strategic Importance.
Western Australia – $1.6 billion which includes the following projects:
$349 million for the Tonkin Highway.
$115 million for the Fremantle Traffic Bridge.
$140 million for the Albany Ring Road.
$122 million for the Urban Congestion Fund.
$393 million for the Roads of Strategic Importance (North) – $142 million for the Roads of Strategic Importance (South).
Northern Territory – $622 million which includes the following project:
$492 million for the Roads of Strategic Importance.
Tasmania – $313 million which includes the following projects:
$210 million for Roads of Strategic Importance – $68 million for the Tasmanian Freight Rail Revitalisation Program.
$35 million for the Urban Congestion Fund.
Australian Capital Territory – $50 million for new projects.
The Federal Government announced several investments into renewable energy technology renewable energy market, including the following:
- $1.4 billion of equity will be invested into Snowy Hydro 2.0. The investment will help bring 2000MW of renewable energy to the grid which is equivalent to 175 hours of storage and can service up to 500,000 homes in peak demand.
- $56 million will be invested into both the Battery of the Nation and Marinus Link. Working with the Tasmanian Government, a second electricity transmission connection will be created between Tasmania and Victoria, a project that will connect Tasmania’s renewable power generation capability with the mainland.
- 12 power generation projects have been shortlisted to be underwritten by the government.
- $2 billion commitment to the Climate Solutions Fund.
- $3.2 million investment to establish a Priority Transmission Taskforce to better deliver projects.
- $50.4 million investment to support micro-grids feasibility studies for improved power generation in regional and remote communities.
- $8.4 million investment to open the Beetaloo Basin for gas exploration and development. This commitment will help to increase the speed of gas supplies from the Northern Territory to the east coast of Australia.
Personal tax cuts
The Government announced two significant personal tax cuts:
- More than doubling the low and middle-income tax offset up to $1,080 from 2018-19. Taxpayers earning up to $126,000 a year will receive the tax cut.
- Lowering the 32.5% tax rate to 30% from 1 July 2024. This will cover all taxpayers earning between $45,000 and $200,000 and will mean that 94% of taxpayers will pay no more than 30 cents in the dollar.
Health and aged care
Medicare levy low-income thresholds will be increased in line with CPI movements. As expected, the indexation freeze on all GP services on the Medicare Benefits Schedule (MBS) will be lifted from July 1, 2019, at a cost of $187.2 million. The freeze will be lifted on various X-ray and ultrasound MBS rebates from July 1, 2020.
The budget announced $461 million towards a suicide prevention strategy, which will include $111 million in funding for 30 new Headspace services by 2021, some of which will be in regional areas.
Aged care initiatives
The Government will provide $282.4 million over 5 years from 2018-19 for the release of an additional 10,000 home care packages across the four package levels. The Treasurer said this will bring to 40,000 the number of new packages announced over the last 18 months. The Government is also providing a $320 million general subsidy boost in 2018-19 for residential aged care, 13,500 new residential care places and $84 million for carer respite.
The Government will provide $10 million over three years to Australia’s National Institute for Aboriginal and Torres Strait Islander Health Research – the Lowitja Institute – to continue their work to improve the health and wellbeing of Aboriginal and Torres Strait Islander people through research.
Other health announcements include:
- $62.2 million over five years to train new rural GPs.
- $309 million for diagnostic imaging services, including 23 new MRI licences.
- $331 million over five years for new pharmaceuticals, including high-cost cancer treatments.
- $107.8 million over seven years for hospitals and facilities including Redland Hospital, Bowen Hospital, Bass Coast Health and Ronald McDonald House.
- $70.8 million over seven years for regional cancer diagnosis, treatment and therapy centres
- $114.5 million from 2020-21 to trial eight mental health facilities for adults.
- $43.9 million for mental health services for expectant and new parents.
- $35.7 million over five years for increased dementia and veterans’ home care supplements.
- $320 million this year as a one-off increase to the basic subsidy for residential aged-care recipients.
Domestic and family violence
Under its Fourth Action Plan (2019-20) to reduce violence against women and their children, the Government has allocated the following:
- $75 million to fund for emergency housing for women and children escaping family violence.
- $64 million in additional funding to 1800RESPECT for an update of its services and to ensure that it can meet the demand for its services.
- $35 million funding to address the needs of Aboriginal and Torres Strait Islander people affected by violence, particularly in remote areas.
- $25.5 million over six years to establish a National Centre for the Prevention of Child Sexual Abuse. The Centre will raise awareness, reduce stigma and work to prevent child sexual abuse.
The Government aims to disrupt the black-market economy by imposing new compliance obligations for ABN holders to retain their ABN. ABN holders will now be required to:
- lodge their income tax return from 2021 if they have a tax obligation.
- confirm the accuracy of their details annually from 2022.
Government response to Banking Royal Commission
The Government will provide $606.7 million over 5 years from 2018-19 to facilitate the response to the Hayne Banking Royal Commission.
Contractors and consultants/micro-business
New commitments including the following:
- Small business disputes with ATO – $57.5 million is to be provided over five years from 2018-19 to the Department of Jobs and Small Business, the Administrative Appeals Tribunal (AAT) and the Australian Taxation Office (ATO) to provide access to a fast, low cost, independent review mechanism for small businesses in dispute with the ATO. This includes $1.4 million in associated application fees.
- Addressing sham contracting – the Government announced that it will provide $9.2 million over four years from 2019-20 (and $2.3 million per year ongoing) to establish a dedicated sham contracting unit within the office of the Fair Work Ombudsman to address sham contracting behaviour engaged in by some employers, particularly those who knowingly or recklessly misrepresent employment relationships as independent contracts to avoid statutory obligations and employment entitlements. The unit will be designed to more effectively tackle sham contracting by increasing education, compliance and enforcement activities and dedicating additional resources to investigate and litigate cases.
- National Labour Hire Registration Scheme – $26.8 million is allocated over four years from 2019-20 (and $6.2 million per year ongoing), including $1.0 million over four years in capital funding, to establish a National Labour Hire Registration Scheme to protect vulnerable workers including migrant workers. The measure also includes $10.8 million over four years from 2019-20 to enhance the Fair Work Ombudsman’s capacity to conduct investigations into abuse of vulnerable workers.
Budget allocation information sources: Barton Deakin Brief: Commonwealth Budget 2019-2020, 2 April, 2019 and Thomson Reuters Weekly Tax Bulletin, Special Budget Report, 2 April, 2019