CORPORATE TAX HIT TO BUDGET; DUTTON N-PLAN

Company tax take falls, as higher budget deficits loom

Australia is on course to deliver a marginally smaller budget deficit in 2024-25 than forecast in the May Budget, but with rising shortfalls in coming years. The Mid-Year Economic and Fiscal Outlook statement, delivered by Treasurer Jim Chalmers and Finance Minister Katy Gallagher, forecasts a $26.9 billion deficit in 2024-25, down by $1.4 billion on original projections and attributed in part to a lift in tax receipts. Company tax receipts, however, are predicted to fall short by $6.6 billion on Budget night projections - the first time they have been revised downwards since the 2020-21 Budget, as weaker commodity prices take effect. Increased pre-election spending commitments in areas such as student debt relief, housing, and early education and childcare are contributing to a projected lift in the budget deficit in the 2025-26 year, from $42.8 billion to $46.9 billion.

Dutton outlines nuclear option for baseload power

Less than six months from the Federal election, Opposition Leader Peter Dutton has played his trump card on energy supply, releasing his costings for a transition to nuclear energy. In a major policy difference with the Federal Government, Mr Dutton said the Coalition’s energy plan aimed to save up to $263 billion compared with Labor’s renewables-only approach. He said that under the Coalition’s plan, Australia would meet net zero emissions by 2050, one year earlier than Labor’s target, and with fewer emissions beyond 2050. The Liberal-Nationals plan focuses on retiring coal plants being replaced by zero-emissions nuclear energy, supported by renewables, gas, and storage. Up to 14 gigawatts of nuclear energy were planned to supply baseload power to the electricity grid by 2050.

Superannuation contribution tax breaks near $31 billion, says Treasury

Concessional taxation of employer and personal superannuation contributions will cost the Federal Budget almost $31 billion in 2024-25, a study by the Department of Treasury has found. The annual Tax Expenditures and Insights Statement has also revealed that on a ‘revenue forgone’ basis, concessional taxation of superannuation earnings would cost $22.2 billion this year, while capital gains tax exemptions for main residence ownership would total $51.5 billion. Rental deductions would account for $26.5 billion in revenue forgone. The analysis also found that capital gains discounts for individuals and trusts would cost, in hypothetical terms, $22.7 billion in 2024-25.

Population up 2.1 per cent but fall in net overseas migration

Australia’s estimated population grew by 552,000, or by 2.1 per cent, to 27.2 million people in the 2023-24 financial year, according to official figures. The Australian Bureau of Statistics said more than 80 per cent of growth was attributed to net overseas migration, with under 20 per cent of population growth attributed to natural increase. Of the states and territories, Western Australia recorded the highest rate of population increase, of 2.8 per cent, and Tasmania the lowest, at 0.3 per cent. Only Western Australia, Queensland and Victoria recorded an increase in net interstate migration over the 12-month period. Net overseas migration of 445,600 was down from a record 536,000 in 2022-23, and represented the first fall in the NOM since Covid-induced border restrictions were lifted in 2021.

PC gets down to work on productivity inquiries

Treasurer Jim Chalmers is seeking to lift Australia’s workplace productivity, formally appointing the Productivity Commission (PC) to undertake inquiries into five specific areas of performance. Dr Chalmers said average annual labour productivity growth over the decade to 2020 was the lowest in 60 years. The PC inquiries will focus on the goals of creating a more dynamic and resilient economy, building a skilled and adaptable workforce, and harnessing data and digital technology. In addition, the PC’s fourth and fifth inquiries will centre on delivering quality care more efficiently, and on investing in cheaper, cleaner energy and the net zero transformation. The inquiries will take around 12 months.

National jobless rate turns downward

Unemployment in Australia has reversed course, dropping from 4.1 per cent in October to 3.9 per cent, seasonally adjusted, in November. Figures from the ABS show that of the states and territories, only Victoria (4.2 per cent) recorded unemployment above four per cent, with the rate of unemployment as low as 2.9 per cent in the Australian Capital Territory. It is the first time since March this year that the national unemployment rate was less than four per cent.