What the Federal Budget means to 5 key Australian sectors

National professional services firm RSM Australia’s sector leads explain the impact of last night’s Federal Budget for five key sectors: property and construction; agribusiness and farming; technology; manufacturing and health.

Ross Paterson – RSM Australia National Leader, Agribusiness

There was not much joy in the Federal Budget for the farming and agribusiness sectors. They’ve been given a mild reprieve, with the continuation, albeit reduced, of the very popular instant asset write-off. 

“Given no pre-Budget announcements, the fear was that this would end, and there were concerns that it would revert to its previous $1000 threshold,” Mr Paterson said. 

“It was wishful thinking that the government would offer $30k or $40k: in the end it was $20k, which was disappointing.              
“Another disappointing factor was that the heavy vehicle road user charge is being increased from 27.2 cents per litre to 32.4 cents per litre in 2025/26 (a 6% increase per year).

“This effectively reduces the fuel tax credits available to road transport operators (estimated to save $1.1b for the government) which could result in road freight costs increasing for farmers and agribusiness generally that mostly rely on road freight for supplies and transporting livestock and grain to markets.”

He noted that the Budget’s biosecurity boost left farmers possibly no better off. 

“It will be offset in part by increased levies for producers/importers, giving with one hand and taking with the other.

“To say only farmers/importers benefit from biosecurity measures is disingenuous. An outbreak of foot and mouth, for example, would not only be devastating for our livestock producers but would significantly impact our tourism industry.

“It was also frustrating and a missed opportunity that no agri-specific migration visa announcements were made. 

“There was a potential positive in regional housing spend but we’ll need to read the fine print to see how much this might assist agri businesses in particular to be able to attract employees with affordable housing.”

Adam Crowley – RSM Australia National Leader, Property and Construction

“This budget was a missed opportunity – while there was a flurry of announcements around affordable housing and build to rent initiatives, it did not address how the construction sector, with so many facing financial difficulty, would be able to build what is being funded,” Mr Crowley said.

“There’s the sense that the government could have done more.”

He said money put towards skills and workforce improvement and TAFE will hopefully provide much needed skilled labour to the property and construction sector.

“The Government acknowledges that material and labour constraints affecting the residential construction sector have limited the capacity for housing supply to keep up with growing demand. Greater support for the construction sector is needed, whether that be access to grants, offsets or other financial assistance to builders.

“Without greater assistance, rents will continue to increase and housing affordability will continue to deteriorate. 

“An RSM Australia survey in April of 40 leading property builders, developers and investors, identified a range of measures the industry would like to see included in the Federal Budget. Measures included government contracts incorporating rise and fall mechanisms as well as more reasonable risk allocations, banks working with developers to help improve housing supply, continued investment in rural infrastructure and skilled migration visas specific to construction for both blue collar and white collar roles – these issues could have been better addressed in the Budget.”

Jessica Olivier, RSM Australia National Leader, Manufacturing

Manufacturers will be disappointed on the asset writeoff front. While this Budget increased the previous $1k instant asset writeoff to $20k, we note that the current Temporary Full Expensing (“Covid”) measures were not extended, so any manufacturing company waiting on delayed equipment delivery will no longer access the TFE provisions and it’s also unlikely to benefit them given strict criteria (e.g. <$10m turnover, asset costing $20k or less).              
The “priority areas” for the National Reconstruction Fund (NRF) have changed a little in their wording but basically, now include Transport but exclude Food & Beverage and Space. I think that is a real shame.

Overall, Labor remains supportive of Australian sovereign manufacturing capability but with a clear focus on energy transition, supporting this through clean energy and decarbonisation of existing industries and low emissions/renewable technologies. This includes $400 million for the Critical Inputs to Clean Energy Industries stream of the Powering the Regions Fund, to provide grant funding to support the development of clean energy industries by investing in sovereign manufacturing capability of critical inputs, such as steel, cement, lime and aluminium. 

The acquisition of conventionally-armed, nuclear-powered submarines represents the biggest single investment in Australia’s defence capability in our history, supporting 20,000 jobs over the next 30 years in advanced manufacturing. 

The Budget provided $14.8 million over 4 years to establish the Powering Australia Industry Growth Centre, which aims to develop advanced technology and skills as part of the Government’s Australian Made Battery Plan. This will support Australian businesses looking to manufacture, commercialise and adopt renewable technologies. This is in addition to the up to $3 billion allocated to investment in low emissions technologies including green metals under the National Reconstruction Fund.

Taking all of the above into account, it is the migration initiatives and changes to the NRF priority areas that will likely have the biggest impact, Ms Olivier said.

“The government’s flagged review of the Migration system sees a sizeable increase in the Temporary Skilled Migration Income Threshold (TSMIT) from $53,900 to $70,000 from July 1, the first time the threshold has increased in 10 years.  

“While this will likely put significant pressure on lower paid hospitality and care industries, it is hoped it will attract (and retain) genuinely skilled migrants to Australia with trades manufacturers can utilise.”    

Ms Olivier said this would greatly assist in increasing productivity due to resourcing constraints which have affected the sector since Covid (as well as a more general shortage of skilled tradespeople affecting the industry as highlighted across the manufacturing, construction, motor and mining sectors back in 2018). 

Economists predict that such an increase will see a sharp drop in the number of migrants and their families, however if compared to the minimum wage for migrants in the UK (~AUD$49k) then Australia may well seem a more attractive location to those looking to relocate overseas, Ms Olivier said.              
The proposed TSMIT is also higher compared to the *average* annual pay of a migrant worker in the USA of ~AUD$62k, noting the minimum hourly wage in the US differs between states. Closer to home, this puts the Australian minimum wage above New Zealand which was increased to ~$AUD$65k in October last year. 

RSM Australia’s National Technology Leader Mathavan Parameswaran

We welcome the new $392.4m Industry Growth Program and the money allocated to growing critical technology industries. This program will support Australian small to medium‑sized enterprises and startups to commercialise ideas and grow their operations.          

This recognises the important contribution small and medium‑sized enterprises make, and the role they play in transforming the Australian economy and creating new, high skill jobs.  

The Government has allocated $101.2 million over 5 years (in addition to $1b allocated to critical technology as part of the National Reconstruction Fund) to support the development and uptake of technologies that are enabling capabilities across Australian industries - commencing in quantum and artificial intelligence. 

This is necessary funding and a pleasing commitment from the Government.             
Spending for improvements to the migration and education systems (on TAFE, and digital health systems to drive better care) will also be good news for tech.

It’s good to see the government recognise that digital transformation can play a big role in assisting with better healthcare in the future. This Budget also introduces the MyMedicare system to strengthen the relationship between doctors and their patients and produce better continuity of care. In time,

MyMedicare will also be extended to nurse practitioners and other primary care providers. 

The Government is providing $14.8 million to establish the Powering Australia Industry Growth Centre, which will support Australian businesses looking to manufacture, commercialise and adopt renewable technologies. This is in addition to the up to $3 billion allocated to investment in low emissions technologies including green metals under the National Reconstruction Fund.

The tech sector will be keeping a close eye on the details of the NRF, as it will enable money to flow towards future investment, with an impact beyond manufacturing into tech, in particular renewable tech and medical tech.               
While the Treasurer referenced the NRF, the detail remains to be seen, however the Fund should be a boost for the tech sector, which has struggled with the increased cost of capital.  

The sector will be hoping that the Fund will drive further investment, in partnership with venture capitalists who in my observation have been holding back. 

One excellent impact in October and again in last night’s Federal Budget has been a big move to clear the migration backlog. There’s no doubt that the tech sector already has been one key beneficiary of this initiative.  

While the backlog is still way too high, this initial move should have made it slightly easier for tech companies to pick up talent.               
We held an event recently for our tech clients and they reinforced to us that their big issues are access to capital markets and the skill shortage.               
The government needs to take away the time burden of keeping people here (it takes a lot of time to extend visas). Also, people study here and should be able to get a job here after, rather than have to leave when they complete their study. 

One key problem is that while we have good talent coming through our education system and university sector, Australia has a poor record of keeping these people – for example, with overseas students studying in Australia we let more than 50% of them leave even though we have stark talent shortages.

The announcement that an extra 2 years of post-study work rights will be afforded to temporary graduate visa holders with select degrees is a positive step but unlikely to be enough.

We need the federal government to keep delivering on their budget promises to address skills shortages and put a greater emphasis on permanent migration for people who come here to study so that we don’t lose the talent and the investment we’ve made in their education. We must continue to build talent in the digital space so that there are pathways to jobs.   

HEALTH & AGED CARE

RSM Australia’s National Director, Hospitals Jayesh Kapitan 

A $3.5b boost to bulk billing was one of very few Budget initiatives not already flagged in the leadup to the Budget.             
The boost means doctors will be paid three times more to bulk bill pensioners, concession card holders and families with young children, providing 11.6m extra no-out-of-pocket cost visits to the GP.

This will be broadly welcomed by a health sector looking for ways to reduce pressure on public hospitals.

Changes to prescriptions with savings for consumers will be welcomed by many, but not by pharmacists with the Pharmacy Guild indicating it will drive many small business pharmacies to the wall.

From September 1, eligible prescriptions will be extended to 60 days supply, which is tipped to save the average Australian around $180 a year for these prescriptions ($1.2b national savings).

Other key announcements welcomed by the sector include:

• $11.3b for 15% pay rise to aged care workers over four years
• $2.2b primary health care services boost

RSM Australia’s Aged Care lead partner Ray Scott 

The 15% increase in award wages in the aged care sector would be welcome by many as a first step in addressing often severe staff shortages.

“While this is what the sector was expecting it is still well short of what is required to ensure the sustainability of providers in the sector that need further support to meet the demands of a rapidly ageing population,” Mr Scott said.      

“Aged care has become one of the largest areas of expenditure within the budget, and pre-budget announcements highlighting the $11.3b package to fund the Fair Work Commission’s decision for a 15% wage increase was supported by unions and a significant number of employers to address staff shortage,” he said.

“This initiative will likely increase salaries of 250,000 workers within the sector. This, combined with aged care providers receiving additional funding through existing funding arrangements and new grant opportunities, is very welcome.”             
Mr Scott said aged care providers looking to increase their workforce can apply for an Aged Care labour Agreement immediately to streamline the employment and visa process for overseas workers.

“Federal Budget moves to streamline the immigration bottlenecks will be welcomed by many of our aged care clients, as it will promote increased recruitment and workforce retention. We would expect these changes to offer significant relief to providers to help support existing workers and to make attracting new employees increasingly viable,” he said.             
 

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