Federal Budget. Plan your trip. Road work ahead

Transcription

1 Federal Budget Plan your trip. Road work ahead Tuesday 9 May 2017

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3 CONTENTS Contents Analysis 1 Federal Budget highlights 3 Personal income tax 4 Superannuation 5 Small business 7 Property 8 International tax measures 9 Finance and investment 11 Indirect taxes 13 Fintech and innovation 15 Tax integrity 15 Infrastructure 16

4 ANALYSIS Analysis More regulation, less innovation in the Federal Budget The Turnbull Government has sought to balance its political reality with developing a strategy for Australia s future. Against a backdrop of radical reform in key economies around the world, such as President Trump s recently announced major tax cuts in the US, Scott Morrison has today shunned the opportunity for major economic reform. Faced with the political reality of not being able to pass substantive legislative reform, the Government has focused instead on infrastructure spending and social issues in this year s Budget. Pitcher Partners welcomes the Turnbull Government s efforts to back small business and invest in infrastructure to grow the Australian economy. In particular, we welcome the Government s extension of the $20,000 instant asset write-off for businesses with turnover of less than $10 million. But middle-market businesses, which are the backbone of the economy and account for around one third of jobs and one third of economic activity, have largely been ignored. The Turnbull Government has once again missed the opportunity to make a real difference in the middle market. It also seems that the word innovation has been completely dropped from the Government s lexicon. Instead there has been a real focus on new regulation and beefing up the resources of regulators to chase lost revenue, including significant funding increases to key regulators (ASIC, ATO and APRA.) 1

5 ANALYSIS This Budget continues the intent of gradually returning to surplus over the medium term, with the Budget expected to balance in 2021, remaining in surplus thereafter. In making these assumptions, the Government is relying on continued strong commodity prices, and forecast increases to both wages and GDP, which seems bullish to us. Significant investment of $75 billion towards key infrastructure projects over the next 10 years, focused around, road, rail and airport investments, will contribute to the government s effort to drive jobs and growth. However, we remain cautious as to the potentially negative impact of planned changes around foreign investment and limits on deductions available to domestic property investors. Our major concern on this front is that the Government has not given any indication of support for public-private partnerships, which we see as critical to ensuring that the construction and associated industries can grow as a result of this increased spend. The lumpiness of backing a small number of large projects which are not shovel ready means we can expect to see further peaks and troughs in economic activity. On housing, we were pleased to see the release of government land, and the introduction of non-concessional superannuation contributions of up to $300,000 from the sale of the homes of older Australians downsizing. Both these initiatives will contribute to the supply side of the housing affordability crisis. Removing restrictions on non-concessional contributions for downsizers will improve individuals capacity to self-fund their retirement. Incentives for first home buyers to save for their deposit through the superannuation system will improve access and affordability. We are concerned that the Government s vacant property tax could negatively affect housing supply. The proposed new dwelling rules, which state all developers whether Australian or foreign-based cannot sell over 50% of their stock to foreign investors will also have a detrimental effect. The announcements restricting sales of property developments to foreign investors could mean that many projects will not proceed because the local market for apartments is not deep enough to soak up the surplus stock that cannot now be sold to foreign investors. Further, new property development has been strongly supported by foreign bank funding, with Australian banks significantly deleveraging from property over the last months. We question what impact the reduction on permitted foreign investment may have on foreign bank participation. Investors and financiers may also now direct their capital into non-residential property classes, such as commercial properties and hotels, further impacting on the supply side of the housing market. We are also highly conscious of the competitive global market. Care must be taken to prevent foreign investors diverting their capital to other jurisdictions such as Canada, South Africa, New Zealand and the UK. Australia has been defined by our openness to foreign investment, yet the government jeopardises economic growth with any efforts to shut foreign investors out of our property market. The anti-foreign investment messages we are sending could impact foreign investor sentiment and broader inbound capital investment flows. We are also concerned over the proposed levy on the five major banks liabilities which looks to us like a stealth super profits tax. This significant new fundraising levy will undoubtedly be passed onto consumers in some form. Treasury believe they can protect the consumer but there are numerous avenues for potential impact. This is because the major banks represent a substantial portion of the ASX and superannuation funds and retirees in particular rely on dividends from bank shares and the capital value of those investments. Finally, on the significant increase in the Medicare Levy, which will be borne by taxpayers across the board, we are wary that the promised quarantining of funds for the NDIS, Medicare and the PBS may not be enforced, but rather lost to consolidated revenue. 2

6 $29.4b 1.75% 2.75% DEFICIT GDP CPI (Surplus by 2020/21) % 2.5% WAGE GROWTH 5.75% UNEMPLOYMENT Federal Budget Highlights NEXT 3YRS Revenue (%) 9% 2% 7% Expenditure (%) 7% 7% 5% 35% Individual income tax Fringe benefits tax Company tax Superannuation tax GST Excise and customs Non-tax revenue Other BUSINESS $75b INFRASTRUCTURE SPENDING (over 10 years) 14% 2% 18% 1% 47% new tax $1.2b LEVY ON BANK LIABILITIES Social sec/welfare Other purposes Health Education Defence General public services $20k SMALL BUSINESS INSTANT ASSET WRITE-OFF 16% 30% 50% CAP ON FOREIGN INVESTMENT IN PROPERTY DEVELOPMENTS PERSONAL 0.5% MEDICARE LEVY in 2019/20 for rent LOSS OF TRAVEL AND DEPRECIATION DEDUCTIONS HECS THRESHOLD OVER 65 SUPER $42k $300k 3

7 PERSONAL INCOME TAX SPEED HUMP Personal income tax There are no changes to personal income tax rates proposed in the Budget. This means that the 2% Temporary Budget Repair Levy will end on 30 June The following individual income tax rates for Australian residents will apply for the 30 June income year: Taxable income $0 - $18,200 Nil Tax on this income $18,201 - $37,000 19% of excess over $18,200 $37,001 - $87,000 $3,572 plus 32.5% of excess over $37,000 $87,001 - $180,000 $19,822 plus 37% of excess of $87,000 $180,001 and over $54,232 plus 45% of excess over $180,000 Due to the removal of the Temporary Budget Repair Levy from 1 July 2017, the effective top marginal tax rate for the 30 June income year will be 47% including the 2% Medicare Levy (down from 49% for the 30 June income year). The Treasurer announced the Medicare Levy would increase from 2% to 2.5% with effect from 1 July 2019 and low-income thresholds for singles, families, seniors and pensioners would be increased for the income year to take account of inflation. 4

8 SUPERANNUATION Superannuation No major superannuation changes were announced in the Budget given the major changes from 1 July 2017 announced in the last Budget are still being implemented. Superannuation related changes announced include Government s housing affordability measures and some tax integrity measures applying to specific superannuation investments. Contributing proceeds from downsizing to superannuation The Government announced a person aged 65 or over will be permitted to make a non-concessional contribution to superannuation of up to $300,000 from the proceeds of selling a principal residence owned for the past ten or more years from 1 July The contributions are stated to be in addition to contributions currently permitted under existing contribution rules. The contributions are stated to be exempt from the existing age test, work test and the $1.6 million balance test for non-concessional contributions that may otherwise prohibit the contributions being accepted by the superannuation fund under the current rules. There is a lot of detail that remains unclear, including how downsizing will be defined, whether you will be required to contribute the actual proceeds from the property sale and whether the contribution amount will be $300,000 per couple or $300,000 each. Removing the restrictions on non-concessional contributions for these downsizers may improve individuals capacity to self-fund their retirement. The proceeds from downsizing a home in this manner are not proposed to be exempt from the Age Pension assets test, which seems to be a missed opportunity to further unlock barriers to downsizing in the current system. 5

9 SUPERANNUATION First home super saver scheme The Government announced a scheme that will allow first home buyers to use superannuation as a means of saving to purchase a first home. Voluntary contributions to superannuation made by first home buyers from 1 July 2017 will be able to be withdrawn from 1 July 2018 for a first home deposit, along with associated deemed earnings. Contributions and earnings withdrawn will be taxed at marginal rates less a 30% offset. In most circumstances, the net tax paid on contributions and earnings under the scheme would be 15%, which may result in a better outcome compared to marginal tax rates that would apply if savings were outside a fund. Up to $15,000 per year and $30,000 in total can be contributed within existing contribution limits of $25,000 per annum. Members of a couple will each have access to the scheme (taking this to potentially $60,000 in total). Similar schemes have been tried in the past and failed due to complexity and the marginal benefits ultimately achievable. Hopefully, the Government has learnt from previous failures and implements the scheme as it has been announced, in which case it will have a high take up rate amongst middle income first home savers. Superannuation borrowing arrangements From 1 July 2017, a person s superannuation balance may be affected by borrowing arrangements entered into by a superannuation fund. The effect of the measure will be to increase what is counted in an individual s total superannuation balance, and how the person s $1.6 million pension cap is measured. This was announced prior to the Budget, including the release of draft legislation. According to the draft legislation, the changes will only apply to borrowings entered into on or after the commencement of the legislation. However, the Budget papers did not confirm whether the measure would remain prospective. Advice should be sought prior to entering into borrowing arrangements. Non-arm s length expenses The Government announced a separate integrity measure relating to non-arm s length arrangements. The non-arm s length provisions will be amended to ensure expenses that would ordinarily apply in a commercial transaction are considered in determining whether a transaction entered into by a superannuation fund meets the arm s length requirements under income tax law. 6

10 SMALL BUSINESS Access to small business CGT concessions The Government has announced it will tighten access to the small business CGT concessions from 1 July As part of its tax integrity package, the Government s proposed changes will deny access to the small business CGT concessions for assets which are unrelated to a small business. This is purportedly aimed at taxpayers with an ownership interest in larger business entities that may currently be excluded when considering the eligibility threshold for the concessions. The small business CGT concessions will continue to be available to small businesses with aggregated turnover of less than $2 million or net assets of less than $6 million. The Government has not provided any further details on this measure and the breadth of these changes is currently uncertain. The disposal of business assets after 1 July 2017 should be carefully considered in light of the announced changes. Instant asset write-off for small business entities As expected, the Government has announced that it will extend the immediate deductibility for eligible assets costing less than $20,000 for a further 12 months to 30 June The immediate write off applies to small business entities with an aggregated turnover of less than $10 million. In order to obtain the tax deduction, the asset must be first used or installed ready for use by 30 June After 30 June 2018, the threshold reverts back to $1,000. This is a welcomed measure and will help to provide an immediate cash benefit to small businesses. 7

11 PROPERTY Restricting residential investment property deductions The Government has introduced two new measures to restrict the availability of deductions in respect of residential investment property, expecting to save $800 million over the forward estimates. In new measures, that will apply from 1 July 2017 (for plant and equipment acquired after 9 May 2017), depreciation deductions will no longer be allowed on removable type assets, typically plant and equipment, acquired with an existing residential investment property. Depreciation deductions will only be available for newly acquired assets, where the property owner directly incurs the expenditure. Under this measure, the entire purchase price will be allocated to the property s cost base for capital gains tax purposes, rather than being apportioned between the property, and removable assets such as carpets, dishwashers and air-conditioning units. The allocation of the purchase price as between the property and the component assets would ordinarily be performed by a qualified quantity surveyor. The rules may prevent genuine purchasers of newer homes, with relatively high amounts of undeducted depreciation, from claiming deductions for the decline in value of these assets. Deductions will no longer be available over the life of the asset, but will instead form part of the cost base of the property. Legislation will also be introduced to limit deductions available for travel expenditure for inspecting, maintaining or collecting rent. Deductions were previously available for travel on an apportionment basis. Whilst these rules are being tightened, deductions will still be allowed for investors using real estate agents to manage investment properties on their behalf. Although the Government has not specifically targeted negative gearing, these measures (in effect) target tax deductions and the tax effectiveness of holding rental properties. Investors will need to take into consideration these proposed changes when looking to invest in preexisting rental properties. For new properties, depreciation benefits may still be available where an investor buys the depreciable assets as part of the purchase. However, the extent that depreciation may be available for all depreciable assets will be subject to the detail of the new provisions. 8

12 INTERNATIONAL TAX MEASURES International tax measures Foreign residents owning or looking to invest in Australian real estate have been targeted in the Government s housing affordability measures. Foreign residents will lose the main residence exemption, face restrictions on their ability to invest in new real estate developments and be subjected to a higher CGT withholding and a lower minimum threshold upon the sale of residential property. Tightened integrity measures have been designed to ensure foreign residents pay Australian tax when disposing of indirect interests in real property. Foreign resident investors Foreign tax residents and temporary tax residents will no longer be able to access the CGT main residence exemption. Grandfathering will be available until 30 June 2019 for properties held prior to 7.30 pm (AEST) on Budget night. This could have a significant impact on former Australian tax residents who always intended to return to Australia after their overseas stint as well as long term temporary residents. We await the finer details of this measure as we foresee a number of practical difficulties with implementing this in a manner which is fair. The foreign resident CGT withholding regime introduced with effect from 1 July 2016 has been expanded. The measures currently apply a 10% withholding to sales of residential property by non-residents where that property is worth more than $2 million. It is proposed that from 1 July 2017 the threshold would be reduced from $2 million to $750,000 and the withholding tax rate would be increased to 12.5%. The median house price in many Australian capital cities is likely to exceed this threshold and therefore any seller not subject to the rules will need to obtain an exemption certificate. The ATO will face a significantly increased volume of clearance certificate requests as a result. It will be important that the ATO is sufficiently resourced so that it can issue these clearance certificates promptly for the vast majority of Australian sellers who are not ultimately caught by the CGT withholding rules. 9

13 INTERNATIONAL TAX MEASURES Foreign residents will have reduced choice in property acquisitions after the introduction of the 50% cap on foreign ownership in new housing developments. This cap will be implemented as part of the New Dwelling Exemption Certificate process and will apply to applications made after 7.30 pm AEST on Budget night. Given many new developments have traditionally been marketed to overseas buyers, this measure may put the feasibility of some property developments at risk, particularly when combined with the impact of recent state tax changes such as the increase in stamp duty on off the plan purchases in Victoria. Any reduction in demand for new property developments would also place financial pressure on Australian property developers who constitute an important part of Australia s economy. It remains to be seen whether this measure will positively impact on Australia s new housing stock and indeed the economy as a whole. Consistent with the theme of creating greater housing availability for Australian residents, the Budget proposes an annual levy of at least $5,000 on foreign owners of residential property where that property is not occupied or genuinely available on the rental market for at least six months of the year. An integrity measure has also been proposed which would apply the principal asset test on an associate inclusive basis for foreign tax residents with indirect interests in Australian real property so that foreign tax residents cannot avoid a CGT liability by disaggregating indirect interests in Australian real property. This integrity measure would apply in calculating the value of the underlying Australian real property owned by an entity. Changes to foreign investment framework The Government proposes to introduce a range of amendments from 1 July 2017 to simplify Australia s foreign investment framework with the intention of making foreign investor obligations clearer through a more efficient allocation of Foreign Investment Review Board screening resources to higher risk cases. The proposed changes include the introduction of a new exemption certificate for low risk foreign investors, legislating existing fee waiver arrangements and amending the treatment of residential land used for a commercial purpose. Updates to the MAAL The Budget proposes some retrospective changes to the multinational anti-avoidance law (MAAL) to expand its scope to non-corporate entities and structures. Broadly, the MAAL is designed to capture arrangements where entities seek to avoid a taxable presence in Australia in connection with sales to Australian customers by booking their revenue offshore. Foreign property investors have borne the brunt of this Budget s housing affordability measures. However Australian residents still need to exercise caution if they move overseas or seek to sell a home worth $750,000 or more. Multinational integrity measures, consistent with many recent Budgets, were not forgotten, but perhaps by now multinationals won t be surprised that the risk management bar has been lifted again. 10

14 FINANCE AND INVESTMENT Introduction of a major bank levy from 1 July 2017 Effective 1 July 2017, a major bank levy will be imposed on Authorised Deposit Institutions (ADI) with licenced entity liabilities of at least $100 billion. It is expected that this will apply to CBA, ANZ, NAB, Westpac and Macquarie. The levy is budgeted to raise $6.2 billion over the next four years, one of the most significant revenue raising measures announced in the Budget. It is expected that the levy will apply to a wide range of ADI liabilities including corporate bonds, commercial paper, certificates of deposits and Tier 2 capital instruments. The levy will not be imposed on additional tier 1 capital and deposits afforded protection by the Financial Claims Scheme. Such deposits are in respect of individuals and businesses. As part of this measure, the Australian Competition and Consumer Commissioner (ACCC) will undertake a residential mortgage pricing inquiry until 30 June Under the inquiry the ACCC will have the power to require ADIs to explain any changes (or proposed changes) to residential mortgage pricing, fees, charges and interest rates. Despite the ACCC being empowered to make the necessary enquiries, it is unclear at this stage whether the ACCC can prevent the banks from adjusting prices. There are two important impacts of this announcement. Firstly, this may increase cost of funding to the larger banks, which ultimately may seek to be compensated by increased mortgage interest rates. While the ACCC inquiry may help to reduce the impact of this, it is unclear whether this inquiry will be effective at this stage. Therefore, this levy may result in higher interest rates for individuals and businesses and less liquidity for business lending. Secondly, more opportunities will arise for the smaller banks and alternative debt financing providers (e.g. mortgage funds) that may seek to capitalise on this opportunity to provide more competitive alternative financing. 11

15 FINANCE AND INVESTMENT New tax incentives for investing in affordable housing The Government has introduced tax incentives to encourage investment in affordable accommodation for low to moderate income households. This includes specific incentives for Managed Investment Trust (MIT) vehicles, as well as a CGT concession for resident investors who invest in these schemes. From 1 July 2017, MITs will have the ability to acquire, construct or redevelop property to hold as affordable housing. Investors in these vehicles may therefore access concessional taxation treatment. In order for investors to gain access to these tax concessions, MITs will need to meet specific criteria prescribed under the new rules, these include: The affordable housing must be available for rent for at least 10 years The MIT must derive at least 80% of its assessable income from affordable housing Up to 20% of the MIT s income may be derived from other eligible investment activities Qualifying housing must be provided to low to moderate income tenants Rents must be charged at a discount below the private rental market In circumstances where particular requirements are breached, both domestic and non-resident investors may be taxed at a higher rate. For example, where properties are held for rent as affordable housing for less than 10 years, the returns on disposal of the property can be subject to a 30% withholding rate on the net capital gain for non-resident investors. To further encourage investment in new and existing affordable housing, the Government has announced from 1 January 2018, Australian resident individuals investing in qualifying affordable housing will be entitled to a 60% discount on capital gains where they hold their investment for three years. These proposals will provide an opportunity for a new asset class to be held by managed funds. Due to the 80% income requirement, the managed fund will need to be a vehicle that is dedicated to holding affordable housing assets, which will mean that the managed fund will not be able to hold diversified property assets. Whether this structure will be feasible will ultimately depend on the impact that reduced rental income will have on lower internal rates of return, as compared to the additional tax discount on capital gains on the ultimate disposal after the 10-year holding period. 12

16 INDIRECT TAXES Residential property purchasers to pay GST directly to the ATO From 1 July 2018, the Federal Government will strengthen compliance with the GST law by requiring purchasers of new residential premises and land in new subdivisions to remit the GST on the sale directly to the ATO as part of the property settlement process. This is expected to increase the GST revenue by $1.6 billion over the forward estimates period. Under the current law, the seller of new residential premises or subdivided land is required to collect and remit the GST associated with the sale to the ATO through its Business Activity Statement. The Government has identified some property developers are failing to remit the GST on their sales, despite claiming credits for GST incurred on development costs. In order to combat this non-payment of GST, the responsibility for payment of the GST will be shifted to the purchaser. Given most purchasers use conveyancers to assist with the transfer and settlement of properties, the Government believes this change should not represent a significant additional burden for purchasers. From a practical perspective, it is unclear how the ATO intends to collect the GST from the purchaser. We expect that property developers will face additional compliance costs as a result of the change, and will be forced to change the settlement statement provided to the purchaser to identify the GST payable on the sale so that the purchaser can remit this amount to the ATO. The change could also result in cash flow issues for developers as they will no longer have the benefit of the GST component of the sale proceeds in their bank account for the period between settlement and lodgement of their Business Activity Statement. Finally, purchasers conveyancing costs may increase subject to what processes are established by the ATO to facilitate payment of the GST. Tobacco taxes the stalwart of all Budgets The Government has identified that roll your own tobacco products currently receive a more favourable tax treatment than manufactured cigarettes. The excise regimes for both will be more closely aligned so that an equivalent amount of excise is paid on roll your own tobacco products. An additional $360 million in taxes will be collected from tobacco sales over the forward estimates period. These changes will be phased in over four years with the first change occurring on 21 September Anecdotally, many smokers have gravitated towards roll your own tobacco products as the price of manufactured cigarettes has increased. This measure will remove that price discrepancy and will result in roll your own tobacco users paying higher prices for their products. 13

17 INDIRECT TAXES Extension of taxable payments reporting regime to courier and cleaning industries The Government will extend the Taxable Payments Reporting regime to contractors in the courier and cleaning industries. The measure will have effect from 1 July 2018 and is expected to generate additional revenue of $318 million over the forward estimates period. The Taxable Payments Reporting regime already exists in the building and construction industry, where businesses are required to lodge an annual report with the ATO disclosing payments made to contractors in the preceding 12 months. The ATO uses this information to detect mismatches between payments made to contractors and the income declared by those contractors, and to identify contractors who are incorrectly dealing with their GST obligations. Entities in the cleaning and courier industries will need to collect the required information from 1 July 2018, with the first report due in August Businesses will need to review and consider how the required information will be extracted from their systems in order to detect any potential problems before the due date of the first annual report. GST and digital currencies The Government has confirmed its intention to remove the double taxation for GST purposes of digital currencies such as Bitcoin, in order to support the growth of Australia s Fintech industry. From 1 July 2017 the GST treatment of digital currencies will be aligned with the GST treatment of money, which means their sale will no longer be subject to GST. GST currently applies to the sale of a digital currency and the subsequent use of that currency in purchasing goods or services, which themselves are subject to GST. No legislation has been released yet and it remains to be seen how the measure will deal with internet-based currency-like products such as in-game currencies, loyalty scheme points, frequent flyer points and digital vouchers. Entities that accept digital currency payments will welcome the change as it creates symmetry with other generally accepted payment methods and removes GST risks and complexities from their business. Entities that make sales of digital currencies, which presumably will become input taxed, will need to consider their input tax credit entitlements in respect of related acquisitions. 14

18 WRONG WAY FINTECH AND INNOVATION CHANGED ROAD CONDITIONS AHEAD TAX INTEGRITY Fintech and innovation A number of amendments were expected to address uncertainties with the current tax concessions relating to Fintech startups. Due to the positive impact previous announcements were having on the Fintech community, it was also expected the Government would look to extend and improve on some of the concessions that otherwise apply to Fintech startups. These did not materialise. Momentum has been lost at a crucial time in the development of the Fintech community in Australia against the backdrop of more rapid developments globally. The only real positive is the release of draft legislation for Crowd Sourced Equity Funding for private companies. Submissions on this new draft legislation are due on 6 June Pitcher Partners will continue in its active consultation to help ensure that these measures provide realistic alternatives to finance for small to medium businesses. Tax integrity measures The ATO continues to focus on the black economy and organised crime. The Government has committed additional funding to continue its two key compliance programs into the black economy for businesses with turnover below $2 million and businesses with turnover between $2 million and $15 million for another year. In addition, extra funding will be given to the ATO to fight serious and organised crime in the tax system. The black economy compliance programs will receive $32 million in additional funding and continue its focus on non-lodgement, omission of income and non-payment of employer obligations such as FBT and PAYG withholding. The program is expected to collect $447 million in revenue over the next four years. The ongoing survival of the black economy compliance program is likely to depend on the Black Economy s Taskforce final report which is due for release in October In addition, the ATO will receive $28.2 million to extend its fight against serious and organised crime in the tax system. This extends the current program to 2021 and is expected to bring in $380 million in additional revenue. 15

19 INFRASTRUCTURE $20b infrastructure boost needs to support growth The Government seeks to boost the economy by investing an additional $20 billion in transport infrastructure over the next ten years, as the mining and housing construction industries retreat. A direct boost to engineering and construction, and the improvement of regional and urban transport networks around the country will help businesses, particularly regional businesses, connect with their customers. The boost will take the total infrastructure investment to $75 billion over the decade, including a $10 billion National Rail Program. This will contribute to projects around the country, including current and future urban rail projects, and investment in regional rail. The Government is also using a mix of equity investments, grants, and concessional loans to support infrastructure investment in the regions. The Government has established a Regional Growth Fund, with $472 million over four years from The Fund will provide grants of at least $10 million to support major infrastructure projects to help transform the regions and support long-term growth. Another $200 million will support an expansion of the Building Better Regions Fund, which supports the construction of capacity-building community infrastructure in the regions. Delivering on an election commitment, a new Regional Investment Corporation will deliver up to $4 billion in concessional loans for water infrastructure and farming businesses. While the Government is supporting investment in hard infrastructure, there is very little new investment in smart infrastructure and emerging technologies that will create value in the broader economy. The Government must be expecting businesses to invest any efficiency savings from these transport investments into their own business development. Finally, the Government has allocated $1 billion to a new National Housing Infrastructure Facility, designed to help remove infrastructure chokepoints and support new housing, through City Deals with local and state governments. It remains to be seen whether the Government s much talked about City Deals can provide a meaningful boost to local and urban infrastructure, and improve housing affordability. 16

20 Get in touch... John Brazzale MELBOURNE Managing Partner john.brazzale@pitcher.com.au Rob Southwell SYDNEY Managing Partner rob.southwell@pitcher.com.au Bryan Hughes PERTH Managing Director hughesb@pitcher-wa.com.au Tom Verco ADELAIDE Managing Principal tom.verco@pitcher-sa.com.au Ross Walker BRISBANE Managing Partner rwalker@pitcherpartners.com.au Michael Minter NEWCASTLE Managing Partner michael.minter@pitcher.com.au MELBOURNE SYDNEY PERTH PITCHER.COM.AU partners@pitcher.com.au sydneypartners@pitcher.com.au partners@pitcher-wa.com.au ADELAIDE partners@pitcher-sa.com.au BRISBANE partners@pitcherpartners.com.au NEWCASTLE newcastle@pitcher.com.au Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. 2017_federal budget_170329