26 October 2022

The first Federal Budget handed down by the Labor Government's Federal Treasurer, Dr Jim Chalmers, highlighted the importance of a responsible Budget and made some hard decisions for hard times.

In particular, it highlighted that businesses and communities need to prepare for a downturn in the economy and identify alternative sources of funding including grants, rebates and incentives.

$15 billion National Reconstruction Fund

The National Reconstruction Fund (NRF) is a new initiative to support projects across seven industry sectors including:

• Resources

• Agriculture, forestry and fisheries

• Medical science

• Renewables and low emission technologies

• Defence capability

• Transport

• Enabling capabilities (engineering, data science and software development)

The NRF will provide loans, guarantees and equity, in partnership with the private sector to unlock investment. The Budget provides $50 million over two years to establish the framework for the fund.

It is the first in a series of investments to realise the co-investment vehicle to revitalise industry, provide well-paid secure jobs and deliver for regional Australia.

Energy efficiency grants for small and medium sized enterprises

The Government will provide $62.6 million over three years from 2022–23 to support small to medium enterprises to fund energy efficient equipment upgrades.

The funding will support studies, planning, equipment and facility upgrade projects that will improve energy efficiency, reduce emissions or improve the management of power demand.

New energy apprenticeship payments

The Government will provide $95.6 million over nine years from 2022–23 to support 10,000 people to complete a New Energy Apprenticeship.

Eligible apprentices will be able to claim a New Energy Apprentice Support Payment of up to $10,000 over the duration of the apprenticeship, comprising $2,000 on commencement, $2,000 per year for up to three years, and $2,000 on completion.

Additional in-training support places will be made available for all New Energy Apprentices, with extra support for targeted groups including First Nations peoples, mature age apprentices, regional and remote Australians, and people from culturally and linguistically diverse backgrounds.

New Energy Skills Program payments

The Government will provide $9.6 million over five years from 2022–23 to support Australia’s workforce to transition to a clean energy economy. This funding will support a new mentoring program to help:

• Train and support new energy apprentices.

• The development of fit-for-purpose training pathways.

• A capacity study by Jobs and Skills Australia to evaluate Australia’s workforce needs to transition to a clean energy economy.

Business grants to be given non-assessable non-exempt income status

State-based business grants handed out during the COVID-19 pandemic are assessable income to the recipient unless the Government places that grant in a special exclusion category.

The Government has announced the following Victorian and ACT business grants to be non-assessable non-exempt income for tax purposes:

Victoria

Victoria Business Costs Assistance Program Round 2 – Top up

Victoria Business Costs Assistance Program Round 3

Victoria Business Costs Assistance Program Round 4

Victoria Business Costs Assistance Program 4 – Construction

Victoria Business Costs Assistance Program Round 5

Victoria Commercial Landlord Hardship Fund 3

Victoria Impacted Public Events Support Program Round 2

Victoria Licensed Hospitality Venue Fund 2021 – July extension

Victoria Licensed Hospitality Venue Fund 2021 – Top up payments

Victoria Live Performance Support Program (Presenters) Round 2

Victoria Live Performance Support Program (Suppliers) Round 2

Australian Capital Territory

ACT HOMEFRONT 3

ACT Small Business Hardship Scheme

This announcement is in addition to several other state-based business grants that have been given non-assessable non-exempt status since the beginning of the COVID-19 pandemic.

Climate change and floods

In his Budget Speech, Treasurer Jim Chalmers said, "$3 billion has been provisioned as a response to recent floods. We will fund Disaster Relief Australia to help deploy more than 5,000 extra volunteers when future disasters strike.

“And this Budget also invests up to $200 million a year in disaster prevention and resilience through the Disaster Ready Fund.”

The Budget Papers said, “To provide transparency on Australia's progress, the Government is investing $42.6 million to restore the Climate Change Authority, introducing an Annual Climate Change Statement to Parliament and increasing transparency around climate-related spending in the Budget.”

The Government will provide $105.2 million to support First Nations people to respond to climate change in their communities.

They will invest $7.1 million to begin reducing their own emissions to net zero by 2030. A further $39.1 million will improve the Australian Public Service’s climate expertise, including by rebuilding Treasury's climate modelling capability.

The Budget Papers also said, “There is $3 billion in the contingency reserve to meet the disaster recovery costs from the flooding events this year.”

Boost for ethical clothing

The Budget includes $6.1 million for Ethical Clothing Australia to support an industry-led campaign to help consumers choose ethically sourced Australian textile, clothing and footwear products and to help protect vulnerable workers.

Grants landscape and what lies ahead

The Budget Papers say, “The Australian economy is facing headwinds from a deteriorating global economy, a global price shock, natural disasters, high inflation and rising interest rates.”

In his Budget Speech, Treasurer Jim Chalmers said, "Inflation is expected to peak at 7 ¾ per cent later this year, before moderating over time, to 3 ½ per cent through 2023–24, and returning to the Reserve Bank’s target range in 2024–25.”

The Budget reverses approximately $2 billion in Coalition programs. This includes redirecting $500 million in funds from the Modern Manufacturing Initiative, Manufacturing Modernisation Fund and the Entrepreneurs’ Program – which will now come to an early end. These funds will be redirected to the National Reconstruction Fund.

Also done away with is the $250 million Building Better Regions Fund. The government will redirect funds from the Safer Communities program and the Regional Accelerator Program. Two new regional grants programs will be created worth a combined total of $1 billion over three years.

As we await details on these new initiatives, now is the time for business owners, Board members of community organisations and decision makers to review funding opportunities currently available at all levels of government and assess eligibility in order to apply in time and access funding.

If you’d like to discuss any of the changes announced in the Federal Budget, get in touch with our Grants experts in the Accounting and Business Advisory team.