Mark Molesworth, Partner with tax experts BDO, said the Treasurer has flagged his intention to dig, tunnel, fly, and power its way out of a deficit with the launch of its A$75 billion infrastructure plan.
“Building infrastructure for the future of Australia - and borrowing where necessary to do so - is a good solution for the government, so long as the chosen projects increase productivity in the economy.”
“It will be the Millennials that will see whether the right projects were chosen. This trend to use debt for infrastructure should solidify Australia’s position with the credit agencies and foreign exchange markets.
Projects announced include: A new airport in Western Sydney; acquiring greater or outright ownership of the Snowy Mountains hydroelectric scheme and then expanding it; upgrading highways across the nation; and funding for a Melbourne-to-Brisbane inland railway.
Apart from this, the budget does not offer much for business Mr Molesworth continued …
“It’s a bland budget because the Government feels that they’re on track for budget repair. To assist that they’ve hit the banks but they realise they need to spend on infrastructure to ensure that Australia is more productive in the future. Also, the Government has responded calls to do something about housing affordability; they’ve made some changes tonight that are within their power, outside cutting back negative gearing or reducing the CGT discount - which is consistent with responses in the BDO pre-budget quick poll.
“It’s a bit of a quick sprint to the finish line for housing affordability but still an endurance race for any real tax reform”
“Apart from the plant and equipment concession that will now be available to more small business (those up to $10m turnover) for an extra year there is not much for business in the budget.
Mr Molesworth identified the main budget themes …
- Taxing and regulating the big banks more heavily; but it remains to be seen whether this simply increases costs to borrowers and depositors.
- An attempt to address housing affordability issues by ‘nudging’ behaviour, often using the existing superannuation and investment system; using the tax system in this way is tricky because the system is a very blunt instrument and the second order effects on behaviour cannot always be predicted.
- Funding the ATO to crack down on consistent non-compliers in the system; and in addition to outright criminals, in particular targeting those in the courier, cleaning and property development industries.
BDO’s comprehensive post-budget report is available for download here - https://www.bdo.com.au/budget2017
Mark is a Tax Partner with BDO in Brisbane. His legal and accounting training provides the basis for a comprehensive understanding of taxation laws. As a result, his clients benefit from accurate tax advice and solutions to their current and future business issues.
Having worked with clients across multiple sectors and borders, Mark has acquired a thorough knowledge of tax law and current trends in the tax arena. He has strong analytical skills, combined with excellent communication skills, and holds a reputation for providing practical solutions to clients’ needs and requirements with the goal of optimising the impact of tax provisions. He has particular expertise in income tax law, including the debt and equity provisions, income tax consolidation regime, CGT rollover relief and trust loss provisions. He undertakes prudential tax reviews and provides tax effective structuring to corporate groups, including public sector and not-for-profit entities.
Mark joined BDO’s tax team in 1998 as a graduate and was made a partner in 2006. Mark is heavily involved in the financial services, technology, media and government sectors.