2022 budget: What’s in store for real estate?

Whereas last year’s focus was on “securing Australia’s recovery”, this year, the plan focuses on building the nation’s “stronger future”, as the government highlights the gains made by a battered COVID economy.

“The last two years have been tough for our country, there have been setbacks along the way. But Australia remains resilient. Australians remain strong. We have overcome the biggest economic shock since the Great Depression,” Mr Frydenberg said.

The Treasurer positioned Australia’s strength on a global scale, claiming, “our recovery leads the world. Faster and stronger than the United States, the United Kingdom, Canada, France, Germany, Italy and Japan”.

Here are some of the key economic figures the Treasurer highlighted:

• Unemployment sits at 4 per cent, the equal lowest in 48 years.
• Roughly 2 million more Australians are in work today than in 2013.
• More women are currently working than ever before.

Mr Frydenberg said this budget represented the “largest and fastest improvement to the budget bottom line in over 70 years”, with this year’s fiscal plan $100 billion better off compared to last year.

The deficit for 2022‑23 is expected to be $78 billion or 3.4 per cent of GDP, while over the next three years, the government projects this figure to more than halve to 1.6 per cent.

Some of the headline measures supported by this year’s budget include:

Housing

As previously reported by REB, with housing affordability a prime issue among voters and first home buyers, in particular, the government has made a big move to double down on its Home Guarantee Scheme.

This includes expansions of the New Home Guarantee, Family Home Guarantee, and First Home Guarantee (previously known as the First Home Loan Deposit Scheme), as well as the introduction of a new funding initiative, the Regional Home Guarantee, open to non-first home buyers. 

• The First Home Guarantee will now accept 35,000 applicants each year, up from the current 10,000, beginning on 1 July 2022.
• The Family Home Guarantee, which previously allocated 10,000 places over a four-year period, will now offer 5,000 guarantees each year from 1 July 2022 to 30 June 2025.
• The new Regional Home Guarantee will offer 10,000 places each year from 1 October 2022 to 30 June 2025 to home buyers, including non-first home buyers and permanent residents, seeking to purchase or construct a new home in regional areas.

NHFIC

An extra $2 billion has been allocated to the National Housing Finance and Investment Corporation (NHFIC) in this spending statement, as the government looks to improve the availability of affordable housing.

Of this amount, around $1.64 billion is being dedicated to the National Housing and Homeless Agreement (NHHA).

Another $223.8 million has been allocated to housing for Indigenous people in remote communities in 2022-23, while $3.8 million has been allocated to the Northern Territory Remote Aboriginal Investment over the coming financial year in a bid to improve public housing and remove asbestos from community building in remote communities.

Fire and flood support

The federal government expects to spend more than $6 billion on disaster relief and recovery following the recent floods in NSW and Queensland.

Income support, temporary accommodation, and social services for households are expected to set the government back $2.2 billion.

A further $588.6 million will be allocated to community clean-up and recovery, including $300 million from the Emergency Response Fund for recovery and post-disaster resilience initiatives.

The government also indicated it would provide an additional $116.4 million for the Black Summer Bushfire Recovery Grant program.

Insurance

The Morrison government has also reiterated its spending for the cyclone and related flood damage reinsurance pool that’s set to come into effect from 1 July 2022, backed by a $10 billion government guarantee.

This pool aims to promote resilience in northern Australia, offering discounts for properties that have undertaken cyclone mitigation, while also collecting data to inform natural disaster planning. 

Small business

“Mr Speaker, small and family businesses are at the heart of our economy and local communities,” Mr Frydenberg began.

He revealed the government intends to reward small businesses that invest in skills and new technology, before adding that “no one knows better than a small-business owner what skills they need in their employees”.

“Starting tonight, for every $100 a small business spends on training their employees, they will get a $120 tax deduction,” he said.

This is with the aim of supporting small businesses to become more productive and competitive and is set to apply with immediate effect to 30 June 2024.

It was reported that this boost would provide $550 million in tax relief for small businesses, thereby incentivising them to upskill their employees.

“More skilled employees will drive productivity gains for small businesses, attract and retain staff in a tight labour market and support their future growth,” the budget read.  

The digital revolution

Following on from its support of upskilling, the government will be throwing money towards “small businesses that are embracing the digital revolution”.

“From tonight, every $100 these small businesses spend on digital technologies like cloud computing, e-invoicing, cyber security and web design will see them get a $120 tax deduction,” the Treasurer said. 

Investments of up to $100,000 per year will be supported by this new measure from budget night to 30 June 2023, with the boost estimated to provide $1 billion in tax relief.

According to the budget, this will “help strengthen business confidence, accelerate digital transformation and create jobs”.

Infrastructure

The budget has also included new commitments to road and rail projects: Brisbane to Sunshine Coast faster rail, Sydney to Newcastle faster rail, the METRONET project in Western Australia, the north-south corridor in South Australia, the Great Eastern Drive in Tasmania, and Central Australian tourism roads in the Northern Territory, as well as a commitment to Melbourne’s intermodal terminals.

More than $500 million has also been allocated to local councils to deliver priority projects, while $880 million will be targeted at better connecting regional Australia with ports, airports and other transport hubs.

REB will unpack the budget further in the coming days.