Treasurer Jim Chalmers unveiled his first Federal Budget on October 25, 2022, eliciting mixed responses due to concerns about rising living costs and escalating energy bills impacting individuals and businesses. This budget is categorized as a mini-budget, preceding the main one scheduled for May each year. Its introduced measures typically come into effect at the beginning of the financial year. Following the election, the new Treasurer committed to delivering a revised mini-budget in October, a promise that was fulfilled.
As the debut budget of the Albanese Labour Government, the focus was on fulfilling election pledges, yielding partial success. However, some experts view this budget as postponing tough decisions on crucial matters until the regular federal budget in May 2023.
Though Australians were assured of relief from living costs, immediate respite doesn't seem prominent in this budget. The Treasurer's pledge of "responsible cost of living relief" in pre-budget announcements and media interactions appears somewhat limited at this juncture. Particularly, addressing soaring power bills, a significant concern for individuals and business operators, seems inadequate.
Before delving into specifics and their impact on truck finance, it's vital to consider two factors when assessing government budgets' relevance to individual circumstances: timing and the legislative process. Numerous measures may only take effect one, two, or even more years down the line. While certain expenditures might seem substantial, they could be spread over a decade. The budget, as a bill, requires approval from both Houses of Parliament before implementation. Presently, the Labour party holds sway in the lower house but not the Senate.
For sole traders and owner operators, personal income often hinges on business performance. Therefore, budget measures affecting both personal and business support carry significant weight.
We provide an overview of some of the key points in the Federal Budget, highlighting potential opportunities for truck owners and explain any truck finance impacts.
The Federal Budget is a very long and involved document and business owners and operators are encouraged to review it directly for details of opportunities and measure relevant to their specific industry.
Some of the general points include:-
- Extension of parental leave and child care support.
- An accord to build 1 million homes in 5 years may provide support for the construction sector – more on this below.
- Infrastructure spending in all states and territories.
- New IR Laws designed to push up wages. This law passed the lower house the day after the Budget announcement and is already receiving pushback from the business community. More below.
- Climate change – $25 billion including changes to the grid to enable more renewables.
- EV buyers – support for heavy vehicle buyers to purchase hydrogen fueled trucks.
- EV car buyers – cut to FBT on EVs, cuts to import taxes.
- Global factors primarily contributing to soaring energy prices with no immediate, direct relief in the budget except for grants for small business.
- $62.6m commitment in grants to support SMEs to improve energy efficiency and reduce use of energy through energy-efficient upgrades. Note that grant applications must meet criteria and usually take time to be processed.
- Small business receives $15 million fund for counselling and debt assistance.
Of key interest to truck owners and operators will be the ‘Driving the Nation Fund’. This is a $500m investment towards reducing transport emissions. Initiatives include EV charging infrastructure at highway sites and hydrogen highways on the key freight routes.
For business operators the parental leave and additional child care support may have mixed effects. Childcare support may allow more primary carers especially women, to be available for work. At a time when unemployment is at record lows this may be welcomed. But it doesn’t come into effect immediately. The expanded parental leave entitlement may create issues for businesses which have to source temporary replacements for staff taking this leave. But this measure is also to be phased-in over several years.
The housing sector of the construction industry has suffered a downturn in recent reporting periods. The Ai Group sees some implications for projects which are existing and some new measures which will be of interest to their members in the Federal Budget. Those in the sector may like to review their commentary.
Included in the Budget is the intention to create new ‘Housing Accord’ which has a target of building 1 million new homes over 5 years. But this starts from the middle of 2024. Affordable and social housing dwellings will also be built under the Housing Australia Future Fund.
The infrastructure component of the budget has received some mixed messaging and those in this sector may need to refer to their projects and areas of interest for details. But in general terms, there is finance set aside for major projects in all states and territories.
The upgrades to roads, especially in regional areas should be welcome news to operators as this may represent less wear and tear on vehicles and the opportunity to achieve greater efficiency on these routes.
- NSW: Sydney-Newcastle high speed rail, Western Sydney roads.
- VIC: Suburban Rail Loop, Stage 2 Barwon Heads Road Upgrade.
- QLD: Bruce Highway and Kuranda Range Road upgrades.
- SA: Upgrades for Stuart, Augusta and Dukes Highways, Southern Expressway and Majors Road interchange.
- WA: Tanami Road upgrade, charging infrastructure for electric buses in Perth.
- TAS: upgrades to key road corridors.
- NT: Tanami and Central Arnhem Road upgrades, contribution to NT Strategic Roads Package.
- ACT: Stage 2A Light Rail
The proposed changes to IR laws included in the Federal Budget immediately attracted criticism from business groups. Minister Tony Burke did may some concessions before the second reading of the Bill. Business owners will no doubt be interested in following the progress of these laws and the impact they may have on their operation.
Truck Finance Impacts
Not surprising that a change of government in such turbulent economic times may create a sense of confusing for many business operators. Possibly just coming to terms with the May Budget outcomes and now there are new policies, possibilities and probabilities to contend with.
It is important to realise that Budget measures do not directly impact truck finance as such. The structure and types of truck loan products remain the same. As was expected in these times, there are no additional tax benefits such as temporary full expensing in the Federal Budget. That measure in its current form is due to expire at the end of this financial year. So those interested should earmark the timeframe to secure their Chattel Mortgage For Truck & trailer Finance.
Inflation and truck loan interest rate are key to truck finance. The ABS released the latest figures on inflation the day after the Treasurer’s budget announcement and that news was not good. Check our article on this ABS announcement.
Our team will be staying across announcements regarding the progress of Budget measures and their impacts for truck finance. So stay in touch with our News and Articles for future updates.
Contact Jade Truck Loans on 1300 000 003 for truck finance.
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