After the massive spending in stimulus packages due to the coronavirus pandemic, more people than usual are likely to be taking more of an interest in the Federal Budget this year. Conservative Governments are not known for splashing the cash too much but their approach to the economic impacts of COVID-19 showed they were not averse to the odd hand-out or two. These measures were much-welcomed by businesses and individuals and in general, many of the objectives of the targeted approach are being realised.
The results have been impressive with the Australian economy performing well beyond predictions. Unemployment is at 5.6% and has been falling over recent months and GDP is showing growth.
On the negative side, all those stimulus measures – JobKeeper, SME cash handouts, business asset investment tax deductions to name a few – have come at a cost to the country. The Government needed to borrow funds to cover those costs, leaving a massive budget deficit to be repaid.
The 2021/22 Federal Budget will be delivered by Treasurer Josh Frydenberg on 11 May and early talk was around whether or not the focus would be on fixing the budget and reducing the deficit or on continuing their current strategic approach. More info here.
So why, if at all, does all this matter if you are looking to seek a loan to buy a boat? Does the budget include any changes to lending interest rates? Do budget measures impact the boat loans offered by lenders such as Jade Boat Loans?
We’re across all those and more questions you may have in this preview of the upcoming 2021/22 Federal Budget.
Preview: 21/22 Federal Budget
If you’re thinking ‘didn’t we just have a budget’? Yes, you’re correct. If you’re not a close follower of these events, the Federal Budget is delivered annually in May. But as May 2020 was pretty much the start of the coronavirus pandemic in Australia with only the initial economic impacts being felt and the outlook dire, the Government deferred the budget to October 2020. So many of the measures announced then are still current and many ongoing.
Add to that the regular updates of the stimulus measures – extensions of some and conclusions to others, it can feel as if we are in a continual budget announcement period. But this year we’re back on schedule for the usual May announcement.
Josh Frydenberg delivered the customary pre-budget speech to a business industry luncheon on Thursday 29 April, in which he outlined the Government’s fiscal strategy over the coming year and beyond. The speech established the current economic scenario by reviewing how the Australian economy was placed before the coronavirus pandemic, the impact of COVID-19 on the economy, and how the Government had responded.
The Treasurer strongly stated that this year’s budget would be focussed on jobs creating and stimulating growth to repair the economy rather than repair the budget. While the speech itself was light on measures and details of individual policies, that detail is starting to be revealed in the equally customary pre-budget policy unveils prior to the big announcement.
He outlined the two phases the Government would be pursuing over the coming period to address growth and create jobs. Energy, ensuring reliable and affordable energy, did receive a mention as did skills and training.
Potential Benefits to You
Since the speech, the flow of specific measures and budget inclusions has started with the round of media conferences and hi-vis photo ops. From the individual, as opposed to business, point of view one of the first announcements of interest was an increase in the childcare subsidy for some parents. If this affects you it could affect the affordability of a boat loan by reducing some of your other household expenses.
For individual taxpayers in some income brackets, there was a big win announced in October which will be fully realised in their tax returns. Tax cuts were brought forward by a year for some taxpayers. This resulted in a bit more in the pay packet each week since the employer implemented the amended tax schedules. But some employers didn’t start the revised tax deductions until as late as November and they actually applied from 1 July. So those taxpayers will have what they are owed by over-paying tax from July to October/November, refunded in their annual return.
In addition, an announcement has also been made that the low and middle-income tax offset will also be extended by a year. Meaning, yes, potentially even more money in your tax refund.
Extra dollars which could be put towards a boat loan? Just saying!
Impact on Boat Loans and Interest Rates
The policies and measures included in the Federal Budget do not directly address lending interest rates. Interest rates are addressed by the Reserve Bank of Australia by way of them setting the official cash rate. That rate forms the basis by which marine finance lenders and others in the lending sector set their rates.
You can easily see on our Boat Loan Interest Rate Comparisons how a range of lenders including Jade vary quite significantly. The outcomes of the budget in terms of reducing unemployment and increasing the rate of inflation over time will have a flow-on effect on interest rates. But the budget measures themselves will not. The RBA has indicated it would be some time before they moved on rates.
Call 1300 000 003 for a quote that meets your budget requirements.
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MISPRESENTED DATA AND DETAILS HEREIN.