Federal Budget progresses multinational tax proposals and makes progress on outstanding tax measures

PwC Australia chief executive Tom Seymour has this evening congratulated the Federal Government for delivering a Federal Budget that keeps Australia on a stable economic footing amid global headwinds.

Kickstarting major election commitments including boosts to modern manufacturing and sovereign capability, Australia’s energy transition, paid parental leave and childcare reforms, a renewed focus on cybersecurity, supply chain resilience and skills shortages, the Federal Budget signals the beginning of a change in policy direction for Australia, while setting up the nation for productivity gains and economic growth. It also includes landmark reform on housing, earmarked to deliver up to 20,000 new affordable homes.

“Australia might be staring down a pending storm caused by global economic uncertainty, but despite these challenges, all Australians can take confidence in the fact that our economy is robust enough to withstand such problems,” said Seymour.

“This Budget shores up our economic security, kickstarts the commitments made by our new government and demonstrates that the fiscal pressures that were caused by COVID-19 are fast subsiding.”

The Budget acknowledges the economic uncertainty ahead by forecasting slowing GDP growth, higher inflation, higher unemployment and a big knock to nominal GDP growth next financial year as commodity prices are forecast to decline over time.

The Budget includes investments in energy transition, housing and up-skilling our workforce, all of which aim to address the underlying factors that are contributing to inflation.

Australia’s structural fiscal deficit will need addressing in order for Australia to rein in net debt

“Our next step as a country will be addressing the structural fiscal deficit that will ensure we can rein in net debt and plot a return to surplus, but for now, this Budget positions Australia to withstand the shocks likely to be posed by geopolitical pressures, global economic downturns and other complex problems the world is facing,” Seymour said.

“Our social services are more important than ever, and with geopolitical sands shifting, our defence costs will need to command a greater percentage of GDP - and as a country we need to be having a national conversation about how we continue to pay for the services we value and expect, such as our healthcare, aged care, childcare and the NDIS.

“Tax reform remains a burning platform for Australia, and as we eye better times ahead, we must start to tackle these structural misalignments that risk stymying our growth and competitiveness as a country.”

Transformational childcare and paid parental leave reforms will narrow the gender pay gap, boost participation, grow productivity and bring families together

PwC Australia welcomes the Federal Government’s landmark paid parental leave reform, enabling new parents to split 26 weeks of leave as part of an expansion of the taxpayer-funded scheme, as a signature economic reform, while the Federal Budget also paves the way for the new Government’s more generous childcare subsidies set to begin in July next year.

“These reforms are about more than just cost-of-living relief for families. We know that Australia as a country is smarter, more productive, more competitive and more prosperous when women have the same opportunities as men to participate in the economy,” said Seymour.

“These reforms go beyond just being economic arguments - these are genuinely precious times in the lives of families, and progressive paid parental leave schemes help bring families together and give dads the same opportunities as mums to bond with their children.

“This landmark reform gives us a chance to break the conventional nexus of childcare, where it’s women who are sacrificing their careers and bearing the brunt of unpaid labour.”

Attention towards skills shortages will help fill gaps that threaten our infrastructure pipeline, energy transition, quality healthcare, and more

The Federal Budget’s lifting of permanent migration from 160,000 to 195,000 will contribute to addressing inflationary pressures and make an immediate impact on Australia’s labour shortage crisis.

“This increase will mean thousands more jobs in healthcare, infrastructure delivery, hospitality, and in other sectors experiencing shortages such as engineering,” Seymour said.

“The Budget recognises that our skills shortage isn’t solved solely by lifting the migration cap. Initiatives such as providing 20,000 additional university places for disadvantaged Australians and 480,000 fee-free TAFE places will help build skilled workforces for in-demand areas such as cloud computing and cyber security.

“The need to upskill, and reskill, the workforce has never been more urgent, because everybody should be able to live, learn, work and participate in the digital world. Bridging the digital divide is a complex problem, but these initiatives recognise that everyone has a role to play making the world more resilient, more productive and more inclusive.”

Rewiring the nation: The Federal Budget delivers the detail behind Australia’s blueprint to deliver on its climate targets

With clear climate targets now enshrined in law, the Federal Budget goes some way to revealing the blueprint for how Australia will reduce its emissions by 43 per cent below 2005 levels by 2030, and net zero by 2050.

“When it comes to the important challenges our country is facing, there is none more complex than our energy transition. The task of successfully orchestrating a massive step-change in our energy landscape is enormous - but so too is the opportunity,” said Seymour.

“Reshaping the energy market to deal with the deeply complex challenges of the rapid shift to renewables will take time, but the Federal Budget gets the ball rolling with the infrastructure investment and the commercialisation of new technologies necessary to make our transition a success.”

Federal Budget progresses multinational tax proposals and clears the decks of outstanding tax measures

The Budget includes a stocktake of some of the previously-announced but otherwise unenacted tax measures.

“This is an important part of the changeover from one government to the next, ensuring certainty for taxpayers regarding tax law changes, particularly for those with an intended start date that has passed,” said Seymour.

“With the current focus on skills and training, it is pleasing to see that the tax measures to incentivise training and technology advancements will proceed. This will give small and medium businesses an opportunity to invest in training and technology, cybersecurity resilience and productivity-enhancing initiatives.”

The Government’s proposed multinational measures are some of the most significant and wide-reaching tax integrity measures seen in many years.

“It is helpful to have additional details on these measures given the expected 2023 start dates are fast approaching,” added Seymour.