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Budget 2016 | ACT reaction

By Michael Reid - 3 May 2016 8

Budget generic

At a glance

– Chief minister says more than 1000 public service jobs will be lost

– Business welcomes tax concessions, intern scheme

 

ACT chief minister Andrew Barr has slammed budget measures that will make nearly $2 billion in savings after the Coalition reneged on its pledge to scale back public service cuts from next year.

Mr Barr said ACT Treasury officials estimated a $1.9 billion efficiency dividend could result in about 1400 fewer Canberra-based public service positions.

“This budget is an exercise in breathtaking hypocrisy,” he said in a statement on Tuesday night.

“The Liberals’ claim this is a budget for jobs and growth, but their so-called efficiency dividend and cuts to national institutions will see more than a thousand Canberrans lose their jobs.

“And it’s pretty hard for Canberra small business to grow, when the Liberals keep sacking your customers. They say they have a plan for cities, but there’s no new funding for infrastructure in the national capital.”

Mr Barr said the federal coalition had broken former prime minister Tony Abbott’s assurance that there would be no further cuts to Canberra.

“Unsurprisingly they’ve done nothing effective to plug the gaping hole they’ve left in our schools and hospitals,” Mr Barr said.

Greens ACT Senate candidate Christina Hobbs said much of the ACT community would be angry with the budget.

“This budget will hit Canberra hard, with more cuts to the public service and big hits to our local economy.”

Canberra’s business leaders, meanwhile, welcomed the focus on small business, tax concessions and a four-year plan to boost youth employment through paid internships.

The government will cut the small business tax rate to 27.5 per cent from July 1 and extend the threshold from businesses earning $2 million to $10 million.

The change would allow about 60,000 businesses with an estimated 1.5 million employees to receive a 2.5 per cent tax cut.

Canberra Business Chamber chief executive Robyn Hendry described the changes as positive for many smaller ACT businesses.

“The ACT is largely characterised as a small business jurisdiction so this budget is good for us,” she said.

The small business tax discount will be increased to 8 per cent with the threshold extended to businesses with an annual turnover of $5 million.

A write-off for equipment purchases up to $20,000 had been due to expire in June 2017 but will now be extended and become available to businesses earning up to $10 million a year.

Businesses earning between $10 million and $25 million will also pay a lower company tax rate of 27.5 per cent from July, with the threshold progressively expanded to businesses with a turnover of $100 million in 2019-20.

Ms Hendry said simplified tax reporting obligations for small businesses would reduce costs and stress at the end of financial year.

“We are however, disappointed that the efficiency dividend targeting the public service will be continuing as it has an impact of smaller institutions, such as our galleries and libraries, which are disproportionately impacted,” she said.

The ACT business community also welcomed a scheme to boost the employment prospects of young Australians looking for work.

The $840 million four-year scheme will be implemented over three stages, providing those under 25 with three weeks of pre-employment training to develop basic skills. They will then be placed as an intern for 4-12 weeks, earning $200 a fortnight in addition to income support.

Employers taking interns will be paid $1000 and a further $10,000 if the intern is hired.

Ms Hendry said it was pleasing the government had acknowledged the cost of hiring inexperienced staff.

“We believe that businesses are keen to play a role in developing staff but the cost of businesses has to be recognised,” she said.

 

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