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How the 2018 Budget Affects the Building Industry


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Builders, trades, and consultants have been given an abundance of reasons to feel optimistic about their prospects following this year’s Federal Budget. Those in the infrastructure sector, in particular, are set to gain, with a $75 billion 10-year plan for major road and rail projects across every state.

Tax cuts and an extension to the small asset write-off scheme have been received as good news by industry stakeholders, including Master Builders Australia. According to MBA CEO Denita Wawn, the Budget will boost confidence in the building and construction industry.

“The Government’s infrastructure Budget will play a key role in setting the nation up for future prosperity. "

“The Government’s infrastructure Budget will play a key role in setting the nation up for future prosperity. The additional $24 billion investment in infrastructure across the country will boost the productivity and liveability of our cities,” she said.

Plans to extend the low-income tax offset to deliver up to $530 a year to lower-income earners, coupled with reductions in personal income tax rates for higher-income earners and SME businesses could also prove a win for builders.

“Reducing the tax burden on households and small business is good for the economy as well as for builders. People may decide to renovate their kitchen sooner or buy their first home faster,” Ms Wawn said. “It’s also great news that our many small builders who are sole traders will also get tax relief in this Budget.”

She said there are 370,000 SMEs in the building sector — more than in any other industry — and all of them will benefit.

In particular, she highlighted the extension of the $20,000 small asset write-off scheme until 2019, which she says is “great news for mum and dad building business and tradies.  “The $20,000 instant tax write-off has been a proven winner with business builders and tradies since its introduction, and Master Builders welcomes its extension for another year.”  

SMEs will also be able to write off their assets faster with a drop in the unincorporated small business tax discount rate from five per cent to eight per cent.

Another bright note for the industry is the Government has delivered more certainty around states and territories signing up to the $1.5 billion Skilling Australians Fund (SAF).

“The SAF will focus on funding for new apprentice training initiatives that are no longer conditional on a levy of skilled migration,” Ms Wawn said.

$250 million is available for state and territories from the SAF in this financial year.

There are some other changes to financial matters that may change the way business is transacted within the sector. CPA Australia Head of Policy Paul Drum flagged some issues of specific relevance to tax and accounting.

There will be new compliance obligations that ban businesses making cash payments above $10,000.

As a response to the recent review by the Black Economy Taskforce, there will be new compliance obligations that ban businesses making cash payments above $10,000.

Businesses will also have to report payments to the Australian Tax Office. That is going to be the case when the transaction is made to product or service providers in sectors with a high risk of cash-in-hand payments to avoid tax. These include security and investigation services, road freight transport, and computer design and related services.

Phoenix activity is also in the firing line. According to Drum, 

“there are to be tougher rules for illegal phoenixing activities, including increased liabilities for directors.” 

The biggest news though is where the government will be creating more work for those in the infrastructure design and delivery sector.

Major project funding pledges included up to $5 billion for the proposed Melbourne Airport rail link; $1.1 billion towards Perth’s METRONET rail; $400 million to duplicate a section of the Port Botany Rail Line and construct the Cabramatta passing loop; $390 million for the upgrade of the Beerburrum to Nambour Line on the Sunshine Coast; $300 million for the Brisbane Metro project; and $220 million for the electrification of the Gawler Line in northern Adelaide.

The biggest news though is where the government will be creating more work for those in the infrastructure design and delivery sector.

Major road projects are also on the drawing board, including $1 billion for the M1 Motorway corridor; $3.3 billion for the Bruce Highway in Queensland; $1.4 billion for Adelaide's North–South Corridor; $971 million to build the Coffs Harbour Bypass on the Pacific Highway in New South Wales; $1.75 billion for the new North East Link in Melbourne; $560 million to deliver Stages 2 and 3 of the Bunbury Outer Ring Road in Western Australia; $280 million for regional road works in the Northern Territory; $461 million for Bridgewater Bridge in Hobart; and a $200 million for improving the Barton and Monaro Highway corridors that link the Australian Capital Territory to New South Wales.

The government has also allocated $250 million towards a new major Projects Business Case Fund. 

This will assist the Federal government to work in partnership with states and territories to develop business cases for major projects. The first cabs off the rank under the fund will be $15 million to support planning for a passenger rail service between Toowoomba and Brisbane and $10 million for EastLink WA. A $1 billion Urban Congestion fund and a $3.5 billion Roads of Strategic Importance initiative are also being established.

The Institute of Public Works Engineers has welcomed the infrastructure spending but sounded a cautionary note in respect of the availability of engineering talent to deliver projects. IPWEA CEO Robert Fuller expressed concern that when planning for major infrastructure projects, the availability of skilled workers needed to be taken into consideration as well.

“We are thrilled and encouraged to see continuing Federal Government investment in vital infrastructure; this is a significant investment in our country’s future,” he said. “At the same time, we are recommending that every related aspect of this investment be carefully considered. Operating and maintenance budgets, together with workforce projections, are essential.

“The success of these billions of dollars of projects is underpinned by first ensuring an appropriate workforce is able to be mobilised — and that’s in doubt at the moment.”

Mr Fuller said any skills shortage could result in project delays, which in turn could drive costs up.

Research by Engineers Australia has shown that Australia already relies heavily on skilled migration to fill engineering positions, with 57 per cent of engineers working in Australia born overseas, compared to 40 per cent in other professions.

Mr Fuller said any skills shortage could result in project delays, which in turn could drive costs up.

“This is a major opportunity for the Federal Government to leverage its economic purchasing power to ensure that skills for the future are a core element of these projects,” he said.  “Our recommendation is the Federal Government support this strong investment in Australian infrastructure with a similarly robust plan to secure a strong and skills-ready workforce.”

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