Fact sheet 6: Regional development
The following highlights a variety of budget initiatives that will have regional development implications:
Depreciation and reform of small business taxation
A move by the Government to enhance taxation arrangements by moving to a 200 per cent diminishing value rate on eligible business assets acquired after 9 May 2006. This initiative is estimated to cut business tax by $3.7 billion over the next four years and encourage Australian business to undertake investment in new plant and equipment, to keep pace with new technology, and to remain ultra-competitive.
The Government will also reduce the complexity of small business tax arrangements as announced in April this year. Initiatives include changes to make the Simplified Tax System more attractive, aligning thresholds for small businesses to make it easier for them to understand their eligibility for various concessions, and simplifying and extending access to the small business capital gains tax concessions. These changes will provide benefits worth $435 million to small business over the next four years.
Venture capital
The Government will introduce a new investment vehicle - the Early Stage Venture Capital Limited Partnership - to increase the provision of start up capital for small, innovative firms. Existing restrictions on venture capital limited partnerships will be eased. The Government will provide $200 million to establish up to ten new funds in a new round of the Innovation Investment Fund programme.
Incorporation fee reduction
The Government will reduce the Australian Securities and Investment Commission's one-off incorporation fee from $800 to $400 from 1 July 2006. This will benefit businesses that wish to incorporate.
Changes to FBT
The Government will broaden the fringe benefits tax (FBT) definition of remote where the shortest practicable route involves travel over water, effective 1 July 2007. This is designed to ensure that FBT remote area concessions, such as those for certain housing related fringe benefits, recognise the special circumstances of employees who work in locations isolated from population areas by a body of water.
Age and service pension - rural areas
From 1 January 2007, the Government will exempt the value of properties from the pension assets test for eligible rural people, where they have had a 20 year connection with the land and it is not reasonable for them to realise the asset or lease the land to realise an income.
Rural industries - fishing
The Government will provide an additional $389 million over four years to combat illegal fishing. With increased surface and air surveillance and patrol capability, the Government expects to double the number of fishing vessels apprehended in Australia's northern waters each year. This initiative also seeks to engage additional rangers from Indigenous communities in Northern Australia to assist in locating vessels hiding in inland waters.
Rural industries - citrus and viniculture
The Government will provide an additional $4.3 million over four years (including $3.1 million in 2005?06) as a contribution to the cost of eradicating citrus canker in Queensland. The Government's contribution represents 50 per cent of the total agreed costs of the programme, in line with the relevant cost?sharing agreements between the Australian and State and Territory governments for plant and animal pest and disease eradication. This funding is in addition to the $11.6 million already provided, bringing the Government's total contribution to $15.9 million.
The Government will enhance the wine equalisation tax (WET) producer rebate scheme. From 1 July 2006, each wine producer will be able to claim an increased maximum rebate amount of $500,000 each financial year, up from the current maximum of $290,000.
Farming assistance - exceptional circumstances
The Government will provide an additional $32.8 million over two years (including $13.2 million in 2005-06) to support primary producers in regions that have been declared eligible for Exceptional Circumstances assistance.
Exceptional Circumstances assistance comprises interest rate subsidies and income support to assist viable farm businesses and farm families who have been adversely affected by exceptional climatic events, such as drought. Eligible recipients are also provided with a health care concession card and access to Youth Allowance. Farmers who have not experienced a break in drought over the past 18 months can have Exceptional Circumstances drought declarations extended for a 12-month period. Such extensions are considered following the receipt of information and advice from the National Rural Advisory Council and the Department of Agriculture, Fisheries and Forestry Drought Taskforce. This measure includes a higher interest rate subsidy and revised off-farm assets and income tests.
Rural financial counselling services
The Government will provide $9.7 million over two years to enhance the Rural Financial Counselling Service programme, which assists rural communities to employ financial counsellors. This funding will improve governance and financial reporting arrangements for the programme. The new arrangements will remove the requirement for mandatory contributions by communities. This funding is in addition to the $23.3 million over four years provided in the 2004-05 Budget measure 'Agriculture - Advancing Australia - Rural Financial Counselling Service'.
Enhancing national training and skills development
Under the new national training agreement covering 2005 to 2008 the Australian Government will provide $5 billion to enhance Australia's training and skills development.
The Government will provide funding of $64.3 million over four years (including $0.4 million in capital funding) to contribute to cooperative action with the States and Territories to implement a new national approach to apprenticeships, training and skills recognition agreed by the Council of Australian Governments on 10 February 2006.
The range of cooperative initiatives will be implemented, in consultation with key stakeholders, including employers, regulators and unions and aims to alleviate skill shortages currently evident in some parts of the Australian economy.
Specific initiatives include the establishment of mutually recognised occupational licensing across all State and Territory jurisdictions for all licensed vocationally trained occupations. Identifying and removing the inconsistencies and duplication between the training and licensing systems in States and Territories will enable people to move freely across regions and have their skills recognised without undergoing additional testing and registration processes.
The Government will also provide funding to facilitate new data sharing and collection arrangements between governments about skills shortages, through expansion of the number of occupations surveyed and reported.
Skilled migration programme and working visas
The Government will implement changes to the general skilled migration programme to place greater importance on English language proficiency. It also will allow the time for applicants to obtain work experience through the Graduate Skilled (temporary) visa to be extended from 6 to 18 months, and expand the countries eligible for their nationals to apply for work and holiday visa arrangements. These changes to commence on 1 July 2007.
In addition to the above, Trades Recognition Australia, the Department of Employment and Workplace Relations and the Department of Immigration and Multicultural Affairs will work with key stakeholders to establish a single offshore assessment process to meet Australian migration, qualification recognition and occupational licensing requirements for intended migrants. The new integrated and streamlined process will allow skilled migrants to arrive in Australia 'job ready'.
Community festivals
The Government will provide a total of $16.1 million over four years to sponsor community-based festivals for young people, such as the Croc Festivals for Indigenous and non-Indigenous young people in rural and remote areas, and the Rock Eisteddfods for high school students. This measure will promote healthy, positive lifestyles for young people to improve educational and employment outcomes and reduce crime.
Regional university services
The Government will provide $10.0 million for universities to encourage local businesses to establish and maintain key services at regional campuses. This is designed to help facilitate the transition to voluntary student unionism in regional areas where small businesses may not have adequate resources to replace the services previously delivered by student unions.
Foundation for Rural and Regional Renewal (FRRR)
The Government will broaden the scope of the program to allow it to receive tax deductible donations from regional community foundations and to the use of these funds exclusively for projects in those regions with effect 1 July 2007.
For information about ALGA's analysis of the Budget regarding Regional development please contact:
- Rolf Fenner
- Senior Policy Adviser
Australian Local Government Association - Phone: 02 6122 9443
- rolf.fenner@alga.asn.au