2020 Budget delayed until October
In light of the uncertainty created by the coronavirus situation the Federal government has elected to defer the Federal budget until October 6, 2020.
The government is faced with dealing with the largest budget blowout since the end of World War 2 and is faced with some tough decisions as the government debt level has blown out considerably in the face of emergency stimulus measures like Jobkeeper and Jobseeker payments.
With jobseeker payments and Jobkeeper payments due to be cut, the government is mindful that it must do everything it can to keep the economic pump primed while maintaining some form of restraint in managing the nation’s finances.
There is no doubt that difficult decisions will have to be made in the coming budget and future budgets for the foreseeable future. The Morrison government has shown a strong commitment to the housing market through such schemes as the First Home Owners Deposit scheme and the First Home Super Saver scheme. It is clear that they see the housing market as one of the key drivers of the economy and while there has been no set commitment by the Government at this time, it is reasonable to believe that they will do everything they can to stimulate and protect this sector.
In recognition of the situation the Real Estate Institute of Australia has made a five-point submission to the Australian government seeking continued assistance for the entire real estate sector. The detailed five-point plan includes the following:
- To not only continue the First Home Owner Deposit scheme but to expand it to all first home buyers. To support this recommendation the REIA has emphasized the importance of uniformity of assistance to first home buyers and that there should be no discrimination between buyers of new or established housing. They point out that less than one fifth of Australian first home buyers buy new homes with the overwhelming majority purchasing established dwellings.
- That the government extends the First Home Super Saver to include pre-July 2017 extra contributions and earnings. This would allow First Home Buyers to supplement their initial home deposit. These initiatives are already taking place in other developed countries such as New Zealand, Canada, and Singapore.
- That the government continues to support the success of HomeBuilder by reducing the lower limits of the program. The REIA is advocating for a reduction in the amount deemed eligible for renovations. They contend that medium sized renovations will generate almost as much employment as large renovations and a reduction in eligibility criteria will stimulate demand and create greater levels of employment
- A continuation of the Jobkeeper and Jobseeker programs for sectors of the economy that are going to take some time to recover from the economy’s hibernation.
- An extension of rental support for those sectors of the economy likely to take time to recover
These are difficult times and the government has the unenviable task of balancing fiscal responsibilities with nursing the economy back to health. While it is unlikely that they will adopt the REIA’s recommendations as a whole, given the government’s commitment to the housing sector, the building industry and first home buyers, it is reasonable to expect that these concepts will form part of the government’s thinking going forward. While most of these initiatives will certainly match the government’s thinking and philosophy, the question will be how far the government is prepared to go into debt to prop up the economy.
These are very uncertain times and the budget will help to bring some certainty to all sectors of the economy for the coming months. Whatever the outcome of the budget, our team will be available to help you work through the ramifications and the opportunities presented.