Australian 2021/22 Budget & Its Impacts on Logistics
Although many are calling this years budget an "Election budget", the Australian Government is shaping up to support Australians with much needed funding going to essential causes. The 2021/22 budget has been dubbed the "Recovery budget", with an overall theme to secure Australia's economic recovery after the impacts of Covid-19 last year.
With much of the budget addressing key areas such as aged care, women's equality & health, the environment, unemployment and skills & training, there is optimism also within the logistics and trade industry.
The Budget assumes that all Australians will be vaccinated by the end of 2021 as long as the vaccine roll out continues as scheduled. It also assumes that state borders will remain open and international borders will remain closed until, at minimum, mid 2022. With almost all international travel shut off to Australians, the Government expects Australians to spend what they usually would overseas within our home country.
Key Budget Themes
- 5.5% drop in unemployment rate
- 4.25% growth in economy
- $110 billion revenue increase thanks to iron ore sales to China - Iron Ore prices are now four times the level as estimated by the Australian Treasury in 2020.
- $1 trillion in debt although the Australian government alerts that interest rates are lower than ever.
- $17.7 billion to aged care services over the next four years
- Aged Care packages & incentives for workers to support the industry
- $12 billion to national disability insurance scheme (NDIS)
- Childcare services & workers
- Women's safety, equality & continued efforts to balance unequal wages.
- $2.7 billion for an increased 170,000 apprenticeships to double the job trainer program for increased skills and education for Australian workers.
- $1.6 billion for our environment dedicated toward priority technologies that will drive our future such as clean hydrogen and energy storage.
Key Impacts on Logistics
For the upcoming 2021/22 Budget, the largest impact on Logistics surrounds biosecurity which is estimated to receive a $400 million funding boost.
As explained by the Freight & Trade Alliance and CGT Law "This funding is crucial for importers who have faced delays with the biosecurity clearance of their goods."
This funding will also maintain if not improve the credibility of Australian exports & exporters.
The key trade themes that arise throughout the Budget are anti-dumping developments, improvements on national infrastructure with focus on rail and roads, a new intermodal terminal for Melbourne and a continued push for trade simplification.
The government has committed to over $400 million in new funding of various biosecurity programs. This is designed to both protect our agricultural industries and facilitate the faster clearance of trade.
The frontline biosecurity resources and people will see the largest boost through the following initiatives:
- $14 million per year to address the risk posed by African Swine Fever
- $25.5 million over four years for more modern technology to improve the accuracy and speed of pest detection at the border.
- $14.5 million over 2 years to address the threat of the Khapra Beetle.
- About $80 million over 4 years for a variety of biosecurity ICT systems, technology and data analytics. However, only a fraction of this is devoted to the management of container cargo risks ($1.5 million of a business case to improve systems). One exciting initiative will be the piloting of offshore risk screening using 3D x-ray technology
Another massive initiative is almost $100million over 4 years to manage the biosecurity risk posed by hitchhiker pests arriving in importer cargo. Although small details are given, other than the program will involve greater port surveillance, make greater use if innovative detection technology and be partially costs recovered from industry.
Forecast for Free Trade Agreements
The customs duty forecasts made provisions for the EU FTA, the UK FTA and the Australia-India Comprehensive Economic Partnership. While a quick implementation of the UK FTA is possible, the EU FTA is some way off being concluded and it seems extremely unlikely that an arrangement with India will be reached. The impact of the EU FTA can be seen in the forecasted duty from passenger motor vehicles which is set to drop from $340 million in 20/21 to $70 million in 2022/23.
Melbourne Intermodal Terminal
A total $2 billion has been committed to deliver a new intermodal terminal in either Melbourne's west or north. The total funding for the project will be $4 billion. The terminal is designed to help realise the benefits of a dedicated east-coast inland freight line between the site and Brisbane expected by 2027. This should be contrasted to the planned intermodal site in Melbourne's south East which will have a rail link to the Port of Melbourne and remove trucks from Melbourne's South East port area.
A Faster Anti-Dumping Duty System
Both local industry and exporters will welcome the $5 million investment into Australia's anti-dumping regime. The funding is designed to make the system faster and easier to navigate. An anti-dumping investigation brings a period of uncertainty as do the duties applying to imported goods. Specific funding highlighted was:
- $1.3 million to the Anti-Dumping Commission to "Provide importers and local manufacturers advice on whether goods are subject to anti-dumping duties." Presumably, this is a reference to a system for providing rulings on the application of dumping duties.
- $300K per year to allow the flexibility to apply different rates of duties for particular variants of imported goods.
International Freight Assistance Mechanism
As previously announced, to assist with the reduced availability for air freight trade, the International Freight Assistance Mechanism (IFAM) has been extended until 30 September 2021. With no increase in passenger international travel on the horizon, it is likely that this vital program will need to be extended longer for the logistics and trade industries.
Simplified trade was a major trade topic in the previous budget and the Government has expended its funding in this area. Another $37 million will be committed over 3 years to support processes and ICT systems that impact cross border trade. The question is - it's a good idea to simplify trade, but how will it actually be done?
Following on from the 2020/21 Budget, the upcoming Budget (2021/22) continues to focus on transport infrastructure such as major road and rail (including light rail). To continue to support initiatives developed by the National Freight & Supply Chain Strategy an additional $28.6 million will be invested over four years. The initiatives include $16.5 million dedicated to establishing a National Freight Data Hub, to enhance the collection and access to freight data to support day-to-day operations and $12.1 million over three years for the National Heavy Vehicle Regulator to find engineering assessments for local government owned road networks.
To discover how the Australian 2021/22 Budget directly impacts you, check out The Guardians complete preference guide.