2017-18 Budget reaction

A summary of budget reaction from the government, the Opposition and various commentators on: the budget; the open banking regime; innovation and fintech; and small business.

On the Budget

What the government is saying:

Malcolm Turnbull, Question Time

“This budget is fair,” Mr Turnbull says.

The government is pushing the line that it is pragmatic and finding ways to pay for programs everyone thinks are good.

Scott Morrison, Budget speech

Our choices are based on the principles of fairness, security and opportunity.

What the Opposition is saying:

Via smh.com.au

Labor leader Bill ShortenHon Bill Shorten MP,  Federal Member for Maribyrnong Leader of the Opposition from 13.10.13 says the federal budget delivers a tax cut for millionaires and a tax hike for every working Australian.

Shadow treasurer Chris Bowen said the budget failed the jobs test as unemployment was forecast to rise.

“They’ve changed their tactics, they’ve changed their rhetoric, but they’ll never change their minds,” Mr Bowen said.

“Budgets are about choices, and Malcolm TurnbullThe Hon. Malcolm Turnbull MP, Federal Member for Wentworth Prime Minister from 15.9.15 has made his choices tonight. He has chosen big business over middle and working class families. He has chosen multinationals over Medicare. He has chosen big business over battlers.”

What the commentators are saying:

Peta Credlin, The Australian

When they come to write the history of conservative governments in this country, the 2017-18 budget will be a defining moment.

Last night, the Howard-Costello era ended.

In its place, Malcolm TurnbullThe Hon. Malcolm Turnbull MP, Federal Member for Wentworth Prime Minister from 15.9.15 and Scott MorrisonThe Hon. Scott Morrison, Federal Member for Cook Treasurer from 21.9.15 delivered a budget that owes more to the ghost of Labor leaders past than it does to Liberal fundamentals of debt reduction, prudent spending, lower taxes and smaller ­government.

With a one-seat majority, trying to neutralise Labor by becoming Labor with a budget heavy on tax and spend, with plenty of punishment for public enemy No 1, the banks, is a dangerous course.

Trying to sell the bank hit as a levy is a lie. It is a tax and everyone can see it for what it is.

Stephen Long, abc.net.au

Scott MorrisonThe Hon. Scott Morrison, Federal Member for Cook Treasurer from 21.9.15’s road to budget surplus optimistic, even heroic. On the face of it, this is a strangely Labor budget: spend up big on “nation-building” public works, raise new taxes, and slug the big banks. More Chifley or Curtin than Costello.

There’s a levy on the big four plus Macquarie Bank — effectively a Great Big New Tax — and big new penalties for bad bank bosses; the kind of budget policies you might imagine former Labor treasurer Wayne Swan delivering, but Scott MorrisonThe Hon. Scott Morrison, Federal Member for Cook Treasurer from 21.9.15?

This might seem a little weird, until you realise the conservative gospel of fiscal policy has been tossed out the window.

Editorial, Financial Review

Scott MorrisonThe Hon. Scott Morrison, Federal Member for Cook Treasurer from 21.9.15 has turned up with the wrong budget. The 2017 Coalition budget should have been about driving business investment growth and incentive to help Australia grow its way out of our budget deficits, to do something about the stagnant wages growth that supposedly explains the voters’ discontent and to show the political maturity required to secure the nation’s AAA credit rating.

Instead the Treasurer’s budget is all about tax, spend and build, as the Treasurer uses a temporary windfall in commodity prices to keep up Australia’s decade old habit of spending hopeful optimistic revenue forecasts, with a surplus always arriving in the nick of time at the end of the four year estimate period.

Editorial, The Australian

But in the main, difficult economic reform aimed at winding back public expenditure has been kicked down the road — again. Gross federal debt will blow out beyond $500bn. This undercuts the main Coalition promise of fiscal repair.

In every budget, politics goes into battle with economics. Too often we see the fiscal reform task lose the fight. In this budget politics has again won out and we are left to cross our fingers and hope that the economics looks after itself.

On the open banking regime

What the government is saying:

Treasurer Scott Morrison:

The Government will increase consumer choice and improve competition in banking by giving customers access to and control over their banking data by introducing an open banking regime in Australia.

Increased access to data will improve the information available to consumers and better enable innovative business models to create new products tailored to individuals.

The Government will commission an independent review to recommend the best approach to implement the open banking regime to report by the end of 2017.

What the Opposition is saying:

nothing yet

What the commentators are saying:

Allie Coyne, itnews.com.au

Australia’s banks will be forced to share the data they hold on a customer when requested by that customer under a new regime introduced by the federal government.

The 2017-18 budget reveals an “open banking” scheme intended to give customers greater access to and control over their banking data.

The government’s new scheme mimics the UK model where that country’s banks have been told to allow for API-based sharing of data for individual and small business customers by next year.

The Treasury department has been given $1.2 million to undertake an independent review into out how the Australian scheme should look. It will also consider privacy and consumer protections.

Tony Yoo, businessinsider.com.au

The industry body for fintech startups, FinTech Australia, has declared the budget a winner, citing multiple measures that will assist entrepreneurs challenge the big banks.

FinTech Australia chief executive Danielle Szetho welcomed the announcements, saying the initiatives were “a huge step forward” to foster “a globally competitive Australian fintech industry”.

Daniel Foggo, chief executive of fintech RateSetter, commended treasurer Scott MorrisonThe Hon. Scott Morrison, Federal Member for Cook Treasurer from 21.9.15 for supporting the Productivity Commission’s recommendation to open up bank data.

“In requiring big banks to give consumers greater control over their own data, the government has stood up to the banking sector lobbyists and shown it’s serious about boosting competition in financial services in Australia.”

Xero Australia managing director Trent Innes was more cautious in his reception to opening up bank data, saying it needed to be “done in the right way”.

“This is not about fintechs versus banks — it’s about giving individuals and small businesses access to their data to use on the platform of their choice. We have worked with more than 110 financial institutions globally, including 70 in Australia, to develop close integrations with banking data, so we know the power and impact that this information can have.”

ZipMoney chief strategy officer Dr Tommy Mermelshtayn said that the government hasn’t gone “far enough”.

“Commissioning a report, while promising, does not put the wheels in motion,” he said. “We run the risk of an inconclusive report, sandbagging by big banks and even a change of government which could derail this critical advancement.”

On innovation and fintech

What the government is saying:

Treasurer Scott Morrison

The Government is positioning Australia to be a global FinTech centre.

We will legislate to establish an enhanced regulatory sandbox to facilitate more innovation, promote greater competition and increase choice for Australian consumers. This world-leading regulatory sandbox will allow businesses to test for a period of 24 months a wide range of new financial products and services, allowing businesses to evaluate the commercial viability of new concepts without a licence but subject to meeting minimum consumer protection obligations.

The Government is removing the double taxation of digital currency. From 1 July 2017 purchases of digital currency (such as Bitcoin) will no longer be subject to the GST, just like money. This delivers on the Government’s commitment to remove obstacles to the growth of the Fin Tech industry.

Consistent with the PC’s report on Data Availability and Use, the Government will legislate a mandatory comprehensive credit reporting regime if credit providers are not reporting at least 40 per cent of their data by the end of 2017. Credit markets will operate more efficiently and effectively if credit providers have access to sufficient and reliable data about borrowers to inform decisions about who to lend to and on what terms.

 

What the Opposition is saying:

Shadow Minister, Chris Bowen

Startups can be forgiven for feeling abandoned by the Turnbull Government.

Budget 2017 holds very few – if any – new measures to advance the growth of job generating startups in this country.

Any measures that have been announced in this Budget, like the boost to rural and regional incubator funding, are welcomed: because Labor advocated these initiatives for some time.

What the commentators are saying:

James Karkness, dynamicbusiness.com.au

This year’s Federal Budget is notable for its lack of focus on start-ups, innovation and entrepreneurship, according to Alex McCauley, CEO of Australia’s peak advocacCommunications Access Co-ordinatory group, StartupAus.

“That will certainly cause some frustration, because the Government has done a lot to build expectations that it is committed to making Australia one of the best countries in the world for innovators,” McCauley said in a statement.

Echoing McCauley’s comments, Anna Rooke, CEO of QUT Creative Enterprise Australia, said the budget had ‘diluted down’ the Federal Government’s ‘ideas boom’ rhetoric, which had included a focus on innovation and start-ups. She continued, “It’s disappointing, but this is a budget built around traditional skills and traditional industries like housing and transport infrastructure. We need a plan that focuses on enabling our startups to compete globally, and that empowers companies to capitalise creative industries contributes which contributes $90 billion to the Australian economy.”

Yolanda Redrup, AFR

Startups have been left reeling from Tuesday night’s federal budget, with founders believing they have been left out in the cold – unless they’re a fintech company.

While there were no big ticket items aimed at the job-creating segment of the economy, the government has proposed a number of initiatives to spur the development of new fintech companies.

WiFi startup PoweredLocal chief executive Michael Jankie said the crowd-sourced equity funding extension would likely be the greatest announcement for innovation in the budget.

Overall, many entrepreneurs were left bitterly disappointed there were no additional measures aimed at startups in the budget, with many already wondering how they will fill skills gaps thanks to the changes to the 457 visa scheme.

Chief executive of freelance cloud accounting startup Accodex, Chris Hooper, was also left wondering about the lack of ‘ideas boom’ measures but said he does not expect the government to provide handouts.

The Australian Information Industry Association chief executive Rob Fitzpatrick said the government was taking the lead in the country’s digital transformation through greater investment in ICT infrastructure and capability.

Tony Yoo, businessinsider.com.au

The industry body for fintech startups, FinTech Australia, has declared the budget a winner, citing multiple measures that will assist entrepreneurs challenge the big banks.

FinTech Australia chief executive Danielle Szetho welcomed the announcements, saying the initiatives were “a huge step forward” to foster “a globally competitive Australian fintech industry”. Szetho urged “speedy implementation” of the budget proposals.

On small business

What the government is saying:

Small Business Minister, Michael McCormack

“It’s small business – not Government – which creates jobs and that’s why the Government backs small business.”

“I have heard how it helps small businesses invest in their business and replace or upgrade their assets.

“Partnered with our recently-delivered tax cut for small business and extending the definition of ‘small business’ to benefit more enterprises, this investment continues the Government’s support for small businesses to pursue new ideas, invest in themselves and create more jobs.”

“No matter where I have travelled or whom I have met, red tape is top-of-mind for small business,” Mr McCormack said.

“That’s why the Government is focused on simplifying small business paperwork and committed to cutting red tape costs by $1 billion every year when we were elected.

“Whilst the Federal Government has delivered red tape reduction and simpler paperwork – especially the simpler BAS, which begins from 1 July – I want to work with the States and Territories to continue this good work,” Mr McCormack said.

“I have asked small businesses around Australia to tell me their stories of paperwork and compliance so we can try to make it simpler. This $300 million incentive over two years will help us work with the States and Territories to make the business of doing business even simpler.”

What the Opposition is saying:

Shadow Minister for Small Business and Financial Services, Katy Gallagher

This budget has failed to address significant issues facing small businesses in this year’s budget including rising energy costs, delays in payment times and the rollout of the NBN.

This is a budget which confirms that Malcolm TurnbullThe Hon. Malcolm Turnbull MP, Federal Member for Wentworth Prime Minister from 15.9.15 is a Prime Minister for the big end of town over those working hard to grow their business and create jobs.

While Labor welcomes the decision to extend the small business instant asset write off, we are disappointed that the Government has not acted to stimulate jobs growth or address the all-important issue of cash flow for businesses.

This Budget was an opportunity for Malcolm TurnbullThe Hon. Malcolm Turnbull MP, Federal Member for Wentworth Prime Minister from 15.9.15 to prioritise small business over his best friends at the big end of town but yet again he has failed.

What the commentators are saying:

Mathew Dunckley, smh.com.au

A popular tax write-off scheme for small businesses will be extended for another year in a significant win from the Budget for the sector.

The government has faced overwhelming calls to extend the scheme which allows small businesses to write off purchases up $20,000 instantly for tax purposes and was due to finish in June.  The budget saw this scheme extended for another year.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell said the extension was welcomed

KPMG tax partner Simon Thorp said the move was important as tax cuts had not had much of an effect on the sector.

MYOB chief executive Tim Reed.said the move would encourage business growth and was “exactly the type of measure that delivers confidence to the business community.”

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