A steady hand

Defence, the next significant sector, sees spending of $22.2 billion. This is 5.1% of the budget.

We note that spending on Social Security in this budget is around seven times spending on Defence. Housing and Community Amenities sees spending of $8.6 billion. This is 2% of the budget. Public Order and Safety sees spending of $4.9 billion or 1.1% of the budget.

In Table 2 we see the increases in budget sectors. The largest increase is in Social Security and Welfare where spending rises by $8.2 billion. I can't wait for the Senate Debate in which this increase in Social Security and Welfare spending is attacked as austerity. Increase in health spending are the next largest. Health spending sees a rise in outlays of $2.5 billion.

Education sees the next largest increase of $2.3 billion. Defence sees the next largest rise of $2.2 billion. Public order and safety sees a rise of $496 million.

Growing Jobs

This is one of the few budgets were a lot really happens in the Budget Speech. Everybody knows that most employment is created by small business. This budget really does seek to provide incentives for the expansion of small business. This must inevitably support employment growth.

The first incentive is to reduce the company tax rate on companies with annual turnover of less than $2 million. From 1 July, the company tax rate will fall from 30% to 28.5%. For those small businesses that are not incorporated, there will be a 5% tax discount of up to $1,000 per year.

The real incentive for small businesses is 100% accelerated depreciation allowances. In simple terms, small business can receive an immediate tax deduction for each and every item they purchase up to $20,000. The objective is to increase investment in the 96% of Australian businesses that have turnover of less than $2 million per year. This means that every item, including cars, kitchens or machinery will receive this accelerated depreciation allowance.

The government will also abolish fringe benefits tax on all portable electronic devices like mobile phones, laptops and tablets. The government will also expand the tax concessions for employee share schemes. Employees will not have to pay tax on their shares until they actually receive a financial benefit from those shares. All of these initiatives should speed jobs growth in the small business sector.

The Economic Outlook