(Hong Kong- 10 May 2017) The Australian Federal Budget was handed down last night by Treasurer Scott Morrison to mixed reviews with some calling it a Labor Lite budget as the debt ceiling is raised to AUD600 billion dollars, new taxes and increased spending in a number of areas including infrastructure, education and the National Disability Pension scheme.
The Australian Chamber of Commerce in Hong Kong Chief Executive Drew Waters said that “the budget showed real signs that the Government recognises the problems associated with obtaining a surplus. There is no real talk about paying back debt but more as a ratio of GDP”.
The Treasurer’s decision to install a new bank levy of 6 basis points raising AUD6.2billion to support the budget is evidence of the serious nature as to which the coalition finds itself and looks for war to the estimated surplus project for 2020/21.
The Budget projects a 10th straight year of deficit and includes tax rises and significant changes for the banking sector through APRA’s new banking executive accountability regime.
We as a chamber of commerce welcome the decision to focus on infrastructure and the set-up of the Western Sydney Airport Corporation and the Infrastructure and Projects Financing Agency. We encourage the Government to partner with the private sector on those projects and to consider the views of Infrastructure Partnerships Australia on this matter.
We are also pleased to see the reduction of the corporate tax rate to 25% for all businesses.
The not-unexpected annual foreign invest levy of AUD5,000 on all future foreign investors who leave their property vacant for at least 6 months is of concern to our members as is the removal of the main residence CGT tax exemption. “Many of our members are non-residents and therefore fit under the foreign investor category. Obviously we would have liked this to be different but understand the need to unlock more supply in the housing market to ensure that there is affordability,” said Mr Waters.
The Budget continues to fund ongoing measures to recoup multinational tax and the extension of Multinational Anti-avoidance Law to cover corporate structures involving foreign partnerships and foreign trusts and we as a chamber will look closely at that through our encouragement of a Double Tax Agreement with Hong Kong.
Growth in the Australian economy is expected to rebound to 2.75 per cent in 2017-18 and 3 per cent in 2018-19. The Government expects to no longer borrow to pay for the everyday expenses from 2018-19. The timetable for the expected returns to surplus remains 2020-21, with a projected surplus of AUD7.2 billion.
The Budget projects a 10th straight year of deficit (AUD29.4 billion) and includes tax rises, significant changes for the banking sector with a new big-bank tax, as well as new saving measures including another crackdown of welfare compliance.
Here are some highlights of the Budget:
- Ongoing funding of measures to recoup multinational tax and extension of Multi-national Anti-Avoidance Law to cover corporate structures involving foreign partnerships and foreign trusts.
- Confirmation of the Government's intention to reduce corporate tax rate to 25 per cent for all businesses.
Banking and Finance
- A new Banking Executive Accountability regime will be introduced. Under this regime, senior executives and directors of authorised deposit-taking institutions (ADIs), including all banks, will be required to be registered with the Australian Prudential Regulation Authority (APRA) APRA. The ADI will have to advise APRA prior to making a senior appointment.
- APRA will also have enhanced powers to remove and disqualify a senior executive or director of an authorised deposit-taking institution (ADI), direct adjustments to banks' remuneration policies and enforce new obligations on bank conduct with penalties of up to AUD200 million.
- A new bank levy of 6 basis points will be introduced on large banks with liabilities above AUD100 billion. This measure is forecast to secure AUD6.2 billion over the forward estimates to support budget repair.
- Replace current requirements on businesses employing foreign workers with an annual foreign worker levy of AUD1,200 or AUD1,800 per worker per year on a temporary work visa and a AUD3,000 or AUD5,000 one-off levy for those on a permanent skilled visa.
- AUD75 billion in infrastructure funding and financing over the next decade, with this budget expanding the use of equity and debt financing to fund infrastructure projects.
- Creation of the Western Sydney Airport Corporation to build and operate the new Western Sydney airport, with an injection of AUD5.3 billion in equity over the next 10 years into the company.
- AUD8.4 billion in equity to be provided to the Australian Rail Track Corporation for the Melbourne to Brisbane Inland Rail Project.
- The Government will establish a new Infrastructure and Projects Financing Agency to help assess infrastructure project choices, recruiting people with commercial experience.
- Annual foreign investment levy of AUD5,000 on all future foreign investors who leave their properties vacant for at least 6 months per year. Removal of main residence capital gains tax exemption for foreign investors.
- Restore requirements preventing developers from selling more than 50 per cent of new developments to foreign investors.
For further enquiry, please contact:
Chloe Deng – Public Affairs and Policy Manager
The Australian Chamber of Commerce
– Hong Kong and Macau
301 -2 , 3/F Lucky Building, 39 Wellington Street, Central, Hong Kong
Tel: +852 2522 5054
Fax: +852 2877 0860