Statement 1 (continued)

Budget priorities

Building a Stronger Economy: Jobs, Growth and Opportunity

Jobs and Small Business Package

Small businesses are the engine room of the Australian economy, employing over 4.5 million people and accounting for approximately one-third of Australia's economic output.

Indeed, 96 per cent of Australia's businesses are small businesses. This puts small businesses at the forefront of the transition from resource-led growth toward new and emerging markets.

The Government's Economic Action Plan has focused on delivering the conditions that will support employers to create jobs and ensure that job seekers have access to the opportunities they need. This agenda includes abolishing harmful taxes, cutting red tape and boosting access to markets through free trade agreements.

Cutting red tape is particularly important for small businesses because they experience a proportionately larger regulatory burden than larger businesses. As of March 2015, the Government had announced reforms to generate more than $2.45 billion in red tape savings for businesses, individuals and community organisations.

A $5.5 billion Jobs and Small Business Package will make it easier for Australian small businesses to flourish, and for Australia's unemployed, particularly young people, to move into long term employment. Over 90 per cent or $5.0 billion of the Jobs and Small Business Package is dedicated to tax relief measures, which will encourage small businesses to invest, take on new staff and grow (Box1).

The package will also provide a further series of targeted measures to cut red tape for small businesses, and to encourage start-ups and entrepreneurship. Together, they will support higher levels of investment and employment.

The package also includes $375 million in new measures to help Australia's unemployed find jobs. There will be measures to: help employers take on unemployed job seekers; build employability, particularly for young people transitioning to work; and strengthen job seeker obligations.

The Government is working with the states and territories to consider ways to reduce the waste, duplication and second guessing between the different levels of government. A green paper with options for reform of the Federation is due to be released in the second half of 2015, ahead of a white paper in 2016.

The Tax White Paper process is also considering opportunities to deliver lower, simpler and fairer taxes and to reduce red tape associated with the tax system with a focus on small businesses.

Expanding our horizons and connectivity

The Government's record level of investment in infrastructure is supporting economic growth and prosperity by increasing productive capacity, generating jobs, and expanding business and labour market opportunities.

The Commonwealth's Infrastructure Growth Package announced in the 2014‑15 Budget is rolling out to connect more people to jobs and consumers to businesses, as well as reducing travel times and improving people's quality of life. As part of this, the Government is partnering with the states and territories to unlock major increases in capital to fund infrastructure through the Asset Recycling Initiative. The first agreement under the Initiative was signed with the Australian Capital Territory in February 2015 and the second with New South Wales in March 2015.

Northern Australia is an exciting frontier of economic development and potential. The Government is establishing a new $5 billion Northern Australia Infrastructure Facility to provide concessional loans to catalyse the development of major projects in the North.

The Government is investing $255 million in a digital transformation agenda, to be led by the Digital Transformation Office, to transform the way public services are designed and delivered, making them simpler and easier to use. The myGov platform will be expanded to host more online services for individuals and a new online business account will be created for businesses transacting with government.

The trade and investment generated through Australia's recently completed free trade agreements with China, Japan and Korea will help strengthen the overall economy. These agreements boost our competitive position in these important markets and open up new opportunities for Australian exporters and investors.

These countries represent Australia's three largest export markets — accounting for 55 per cent of total goods and services exports in 2013‑14. Collectively, the agreements will provide a significant boost to our competitiveness, and drive a new phase in ever‑closer economic linkages within our region.

To build on this significant momentum, the Government is also working to conclude other key trade negotiations, such as the Trans-Pacific Partnership and a Comprehensive Economic Cooperation Agreement with India.

Supporting our farmers

The Budget will help farmers in drought by extending the Government's drought relief loan schemes and social and community support measures. It will also help farmers to improve their land by allowing from 1 July 2016 an immediate tax deduction for water facilities and fencing, and three-year depreciation for all capital expenditure on fodder storage assets.

Supporting Australian Families

More affordable, accessible and flexible childcare

The 2015 Budget delivers on the Government's commitment to support families through simpler, more affordable, accessible and flexible child care arrangements. Supporting workforce participation by parents who work, or want to work, complements efforts to improve the nation's productivity and create an even stronger economy.

The Government is responding to long-standing community frustration and simplifying child care assistance. The Government will invest an additional $3.5 billion over five years on child care assistance, including a new Child Care Subsidy (CCS) to be introduced from 1 July 2017 and a nannies trial from 1 January 2016.

Under the CCS, most of the increased fee assistance is provided to low-to-middle income families. There will be no annual cap for families with income below approximately $185,000.

The new CCS will be means-tested and based on actual fees paid. Assistance will be capped per hour to ensure the new system remains affordable and to put downward pressure on fee growth. Eligibility for assistance will be strengthened to more closely align with work, training or study undertaken.

The CCS will be complemented by the Child Care Safety Net. The safety net will provide $869 million over the next four years to better support education and development outcomes for genuinely disadvantaged families and children.

Commencing 1 January 2016, a two-year pilot programme will provide around $250 million for in-home care by approximately 4,000 nannies including for families that find it difficult to access mainstream child care services due to the nature and hours of their work.

Funding certainty for preschool

As part of its commitment to support high-quality early childhood education and care and ensure universal access for all children in the year before school, the Government will provide $843 million to extend payments to the states and territories through the National Partnership for preschool funding for a further two years until December 2017.

'No Jab, No Pay' — Vaccinating our children

From 1 January 2016, a 'No Jab, No Pay' rule will remove all immunisation exemptions, except those for medical reasons, for access to child care payments and Family Tax Benefit Part A end of year supplement. To support the new arrangements, the Government is providing a $26 million boost to the Immunise Australia programme, to encourage doctors and immunisation providers to identify and vaccinate children in their practice who are overdue.

Strengthening the health system

The Government is committed to a strong health system that provides high‑quality care and treatment for all Australians.

The Government is committed to maintaining affordable, sustainable access to medicines through the Pharmaceutical Benefits Scheme (PBS) and is in the final stages of negotiations with industry on reforms to pricing and remuneration across the supply chain to underpin the future sustainability of the PBS. This Budget also provides $1.6 billion for new and amended listings on the PBS, including more effective treatments for cancer.

The Government is building on Australia's great research strengths by providing an ongoing and sustainable boost to funding for vital medical research. This Budget delivers the first distributions from the Medical Research Future Fund, with more than $400 million expected to be provided to researchers over the forward estimates, including $10 million in 2015‑16.

The Medical Research Future Fund is expected to reach the target capital level of $20 billion in 2019-20.

Improving aged care

The Government is significantly reforming home care services delivered to older Australians. From 1 February 2017, funding will be allocated to the consumer based on their care needs. This will allow consumers greater choice in deciding who provides their care and increase competition among providers.

A Fairer Australia

Strengthening the integrity of the taxation system

The Government recognises the need to take decisive action to protect the fairness and integrity of the Australian tax system and ensure individuals and Australian businesses do not carry the tax burden unfairly.

Australia is continuing its international leadership in tackling multinational tax avoidance by actioning key elements of the G20/OECD Base Erosion and Profit Shifting (BEPS) recommendations: country-by-country reporting by large companies to the ATO, hybrid mismatch arrangements, treaty abuse and compulsory exchange of rulings related to preferential regimes.

In addition, a range of domestic measures will be implemented to further strengthen our defences against multinational tax avoidance. A new Multinational Anti‑Avoidance Law will target multinationals that artificially structure to avoid a taxable presence in Australia. This will mean that tax will now be paid on profits from economic activities undertaken in Australia. Approximately 30 large multinational companies are suspected of diverting profits using artificial structures to avoid a taxable presence in Australia and pay little or no tax worldwide.

The Government will also apply the GST to cross‑border supplies of digital products and services imported by consumers from 1 July 2017. This will help correct an anomaly in the current system and level the playing field between domestic and international businesses.

The Government is taking steps to enhance public confidence in the integrity and fairness of the domestic tax system. The Government will extend the GST Compliance Programme to support targeted and integrated compliance strategies to detect, deter and deal with unintended errors or deliberate GST fraud and evasion.

Serious financial crimes pose significant risks to Australia's financial markets, regulatory frameworks and our tax revenue base. The Government will respond to this national problem with a coordinated national solution. Relevant law enforcement and regulatory agencies will work together to tackle serious financial crime in a whole‑of‑Government Serious Financial Crime Taskforce.

The Government is also addressing excessive use of salary packaged 'meal entertainment' benefits in the not-for-profit sector, by introducing a new grossed-up cap of $5,000 to apply from 1 April 2016. Capping these benefits will improve the integrity of this concession for the not-for-profit sector with an estimated revenue gain of $295 million over the forward estimates. Workers in these sectors will still be eligible for generous FBT concessions.

Better targeting of the Zone Tax Offset to exclude 'fly-in-fly-out' and 'drive‑in‑drive‑out' workers will take effect from 1 July 2015 and is estimated to have a gain to revenue of $325 million over the forward estimates period. It is estimated that around 20 per cent of all claimants do not actually live full-time in the zones and do not face the same challenges of remote living that the offset was designed to address.

Strengthening the integrity and sustainability of the welfare system

The Government is also taking steps to strengthen the integrity of the welfare system. These measures will help ensure the welfare system remains sustainable, and enable the Government to continue to provide support to vulnerable Australians.

The Government is taking action to target assistance to those most in need, improve compliance and ensure that social obligations are met. This includes an initial $60.5 million to commence upgrading the Department of Human Services' information and communications technology. The Government will also increase its capability to detect, investigate and deter suspected welfare fraud and non-compliance which will return around $1.5 billion to the budget.

The Government will also remove double dipping in the Parental Leave Pay (PLP) scheme from 1 July 2016.

To ensure a fair pension system, where assistance is directed to those most in need, the Government will increase the assets test thresholds and taper rate for pensions from 1 January 2017. The Government will not proceed with the 2014‑15 Budget measure to index pensions by consumer price index only.

Strengthening Australia's foreign investment framework

Foreign investment is integral to Australia's economy and the Government welcomes all investment that is not contrary to our national interest. Following extensive public consultation, on 2 May 2015, the Government announced a package of measures to strengthen the foreign investment framework to make sure the rules are enforced.

The reform package will ensure stronger compliance with the longstanding foreign investment rules and impose stricter penalties on those breaking the rules. There will be increased scrutiny around foreign investment in agriculture and increased transparency on the levels of foreign ownership through a comprehensive land register. The enhanced system will be funded by application fees on all foreign investment applications.

In total, these measures constitute the most significant reform to the framework in 40 years. The bulk of the reforms will commence on 1 December 2015.

Higher Education Loan Programme (HELP) debts from Australians residing overseas

The Government is making the HELP scheme fairer by recovering HELP debts from Australians residing overseas. The new arrangements will impose an obligation on Australians residing overseas to repay their HELP debt on an income-contingent basis on the same terms that apply to those residing in Australia.

Protecting Australia

The Government is investing $1.2 billion in new funding for national security in this Budget. This funding will aid our multi-pronged strategy to counter threats to Australia and Australians.

Australian military personnel are part of the international coalition leading the fight against terrorism overseas. $750 million of the new funding in the Budget is for operations in Afghanistan, Iraq and the Middle East to combat terrorism at its source and contribute to global security.

The Budget will continue to strengthen Australia's border protection. The implementation of initiatives to streamline border protection activities will be accompanied by the establishment of the Australian Border Force to keep Australians safe from terrorism and transnational organised crime.

In this Budget, there will be additional investment in information technology to enhance our intelligence agencies' capabilities and we will act to reduce the impact of extremist narratives on Australians.

The Government's improvements to Australia's national security legislation give our law enforcement and security agencies the tools they need to more effectively deter and disrupt those who wish to participate in terrorist activity.