Australian budget: What a difference a year makes

The federal government has produced a budget that is focused on encouraging growth in small business and jobs while re-building popularity among groups most affected by last year’s one.

But it is also conservative enough to head off a possible downgrade in credit ratings.

Generous subsidies will encourage small businesses to spend on big-ticket items, while extra childcare support will push more parents back to work. (see: Winners and losers.)

On the fiscal front, the deficit has widened by $A3.5 billion to $A35.1 billion but Treasurer Joe Hockey has promised to return to a surplus within five years, which should ensure Australia will not lose its AAA credit rating. (See: Deficit widens, surplus by 2020.)

Moody’s Investors Service says the budget has no surprises and is consistent with a stable AAA rating, while Standard & Poor’s says the forecasts are broadly in line with its own expectations of moderate and declining deficits.

As expected, the budget contains a raft of announcements from a crackdown on multinational companies that send profits offshore to avoid paying tax through to a 1.5% company tax cut and a $20,000 instant asset write-off benefit in a $A5.5 billion package for small business.

Mr Hockey says he isn't concerned the pick-up of the small business package will be too great.

“This is about growing the economy. We want people to spend. We want them to go out and have a go,’’ he says.

There are two million small businesses in Australia and the budget is about “unleashing opportunity.’’

Taking effect from July 1, the small business tax cut to 28.5% is expected to benefit about 780,000 incorporated businesses at a cost to the budget of $1.45 billion over four years.

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See more NBR's coverage of the Australian Budget 2015 here:

Australian budget: Deficit widens to $35bn, surplus by 2020

Australian budget: Winners and losers

Australian budget: What a difference a year makes

Australian budget: Hockey details ‘Netflix tax’, ‘Google tax’

Australian budget: What the experts say

Editor's Insight: Joe Hockey's 'have a go' budget

Nevil Gibson
Wed, 13 May 2015