Federal Budget 2021-22: What Does It Mean For Businesses?
Mr. Josh Frydenberg, the current Treasurer of Australia, delivered the Federal Budget for 2021-22 on the 11th of May, 2021 with the aim of securing and stabilizing Australia’s recovery from COVID-19.
More than a year ago, Australia, like the rest of the world, found itself struggling against the challenges posed by the global pandemic. Borders were shut down and lockdowns were imposed all over the country, bringing economic activity to a halt and forcing thousands of Australians out of their jobs.
This period exposed a crucial weakness in Australia’s economy: the manufacturing sector had been withering away for the past few years under the weight of increasing imports and reliance on foreign-produced goods. It could not step up to the challenge of sustaining the economy by manufacturing essential goods and providing employment to Australians all over the country.
To make manufacturing a strong foundation of the Australian economy once again, the government announced the $1.5 billion Modern Manufacturing Strategy in October of 2020. Under this, it placed a strong emphasis on indigenous research and development, scaling up of production, and the creation of skilled jobs for Australians.
Federal Budget To Keep Up The Momentum
The Federal Budget 2021-22 aims to build on top of these investments and accelerate the recovery of Australia’s economy, particularly that of its rapidly growing manufacturing sector. An investment of $475 million has been included in the budget to speed up the industry’s growth and create sustainable, high-paying jobs in manufacturing.
In the words of Christian Porter, the Minister for Industry, Science, and Technology, this new funding is “part of the government’s ongoing efforts to secure Australia’s future as a globally recognized, high-quality, sustainable, and innovative manufacturing nation.”
Income Tax Reliefs To Drive Up Consumer Demand
The budget also includes a number of personal income tax relief schemes targeted towards the over 10 million low- and middle-income earners in Australia.
These include an extension of the low- and middle-income tax offset (LMITO) and up to $25.1 billion of tax cuts for households in 2021-22, as part of the Personal Income Tax (PIT) plan. This will result in combined tax cuts of up to $7,020 for individuals and $14,040 for couples over the 2018-2022 period.
With more money in hand due to these tax cuts, Australians will buy more products and services, raising the level of consumer spending in the economy. Businesses and manufacturers (especially those that sell directly to consumers) will experience a surge in demand for their products, leading them to scale up their operations and hire more workers.
More Adoption of Digital Infrastructure
Following on from the government’s Digital Economy Strategy, the budget includes an expenditure of $117.8 million over the next four years for Australia’s first Artificial Intelligence (AI) Action Plan.
Under this plan, businesses will be given tax incentives to adopt the latest AI technologies and build digital infrastructure. The government will also support the development of world-leading AI projects and train Australians in the upcoming fields of robotics, AI, and quantum computing.
Adopting digital technologies will not only enhance the efficiency of businesses and manufacturers and save their costs, but it will also increase their resilience in the face of events like the COVID-19 pandemic by making them more flexible and quick to adapt.
Increased Availability of Skilled Workers
To increase the rate of employment in the country and the proportion of high-skilled jobs, the budget includes an investment of $2.7 billion over the next 4 years that will go into establishing over 170,000 new traineeships and apprenticeships for young people.
This is on top of the training programs that are part of Australia’s AI Action Plan and aimed at producing more highly skilled workers in the domains of AI and digital technologies.
For businesses and manufacturers, this means greater availability of skilled workers to rely on for sustaining and driving their growth. Instead of investing in in-house training to upskill workers in the areas of operations, manufacturing, and digital technologies, these traineeships and programs will deliver the skilled workers industries will be needing in the future.
With the aim of securing Australia’s recovery, the budget has put forth a number of measures to spur economic growth in the country and create more jobs by utilizing the potential of its manufacturing industry.
It pushes Australia one step closer to developing self-sufficiency in manufacturing - a key competitive advantage we must have if we hope to become resilient against any challenge the future throws at us.