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News release

AUSTRALIA

Federal Budget 2016-17


​The 2016-17 Federal Budget marks a significant re-set for fiscal policy in Australia.

Together with the cut in the official cash rate to an all-time low of 1.75% announced by the Reserve Bank on Tuesday afternoon, the policy path towards growth and investment is now clearer than it was before. 

It is clear that this Budget is unusual in that it is delivered on the eve of a general election. Therefore, while it delivers a credible five year fiscal perspective, it does not address important issues that require attention – the fiscal relationship between the Commonwealth and States, for example, as well as the balance between income and expenditure taxes.  It is clearly a transitional document. It is also a positive that the government has not proceeded with measures such as changes to CGT and negative gearing, previously contemplated.

CEO of JLL Australia, Stephen Conry said, "Ratings agencies and offshore investors in the Australian real estate market will scrutinise the budget forecasts and policies carefully. We expect that they will respond positively to this document.

"It is heartening that the Treasurer emphasised the importance of export trade agreements with major partners in the Asia Pacific region," said Mr Conry.

As anticipated, infrastructure investment is a core theme of the budget. The budget identifies $50 billion of infrastructure investment between 2013/4 and 2019/20, including:

- commitment to the Melbourne to Brisbane Inland Rail project, providing $594 million to buy land and to continue pre-construction activities;

-  $2.9 billion Western Sydney Infrastructure Plan;

-   $1.2 billion for the Perth Freight Link.

Mr Conry said, "The tax cuts for small business are welcome and we expect to see this reflected in investment that will flow through to the retail, office and industrial sectors, with positive impacts on real estate. While small business does not account for big volumes of space take up, it is here that growth occurs. The long-term plan to progressively reduce company tax to all of corporate Australia is particularly welcome."

Dr Rees, Head of JLL Research said, "Business in Australia confronts a range of challenges – the global economic outlook is clouded; business and consumer confidence are fragile and, for long duration assets such as real estate, a clear statement of economic policy is essential. This budget adopts the well-tried strategy of a modest hold on expenditure while relying on growth and inflation to gradually lift tax receipts until fiscal balance is achieved.

"Against a backdrop of global financial market volatility and a looming federal election, the budget reduces at least one source of uncertainty," concluded Dr Rees.