2020 Federal Budget Update

School Specific Measures.

There were no major new initiatives in the Budget relating to school education.

Quality Schools Funding

The Government will provide more than $12,844 million in funding under the Quality Schools funding arrangements in the Australian Education Act 2013 to non-government schools in 2020-21.  This is a decrease by 8.2 per cent in real terms between 2019?20 and 2020?21. This decrease reflects the impact of the July Update measure COVID?19 Response Package — support for non?government schools, which enabled non?government schools to bring 2020?21 recurrent funding forward into 2019?20.

From 2020?21 to 2023?24 funding will increase by 20.1 per cent in real terms, primarily due to the funding arrangements implemented under the Quality Schools package and increased funding for non?government schools in the Government’s response to the National School Resourcing Board’s Review of the Socio?Economic Status Score Methodology. 

Student Support Package

The Government will provide an additional $146.3 million over five years from 2020?21 for a package of initiatives to improve education outcomes of young Australians, particularly disadvantaged students and those most impacted by the COVID?19 pandemic, and to contribute to social cohesion. The package includes:

  • $39.8 million over four years from 2020?21 for the Clontarf Foundation to expand and extend its existing program, which supports the education, discipline, life skills, self?esteem and employment prospects of young Aboriginal and Torres Strait Islander men
  • $38.2 million over four years from 2020?21 for The Smith Family to support around 76,000 disadvantaged young Australians to acquire the knowledge, skills and behaviours needed to complete Year 12 and move into work, training or further study
  • $5.8 million over four years from 2020?21 for Good to Great Schools Australia to develop a pilot program to support up to 10 remote and very remote schools to expand their Direct Instruction literacy program to include numeracy and science
  • $3.0 million over four years from 2020?21 to the Islamic Museum of Australia to develop educational resources and online learning platforms to support social cohesion, multiculturalism and community harmony
  • $3.0 million over four years from 2020?21 to the Anti?Defamation Commission to create a Holocaust education platform to support inclusiveness, civility and respect
  • $0.5 million over five years from 2020?21 to increase the Government’s funding of Fulbright scholarships to Australian citizens to take part in an academic and cultural exchange in the United States of America
  • $25.0 million over five years from 2020?21 to establish a fund to enable the Government to respond flexibly and quickly to emerging priorities and educational challenges presented by COVID?19.

The package also includes $27.3 million over five years from 2020?21 to enhance the science, technology, engineering and mathematics (STEM) skills of young Australians, including:

  • $9.6 million over five years from 2020?21 to the Australian Academy of Science to  deliver curriculum resources and professional learning for Foundation to Year 10 teachers
  • $5.7 million over five years from 2020?21 to expand the Early Learning STEM Australia program to Foundation to Year 2 classrooms
  • $4.8 million over five years from 2020?21 to enhance teaching practices through partnering teachers with STEM professionals
  • $4.4 million over five years from 2020?21 to support approximately 120,000 disadvantaged 3 to 5?year olds through The Smith Family’s Let’s Count program
  • $2.8 million over five years from 2020?21 to Froebel Australia to build the skills of early learning educators to deliver STEM learning in preschool and child care settings.

Measures Impacting Schools.

There are a range of measures in the Budget which will, subject to the passage of legislation, potentially impact schools. 

JobMaker Payments

The JobMaker Hiring Credit will be available to employers for each new job they create over the next 12 months from 7 October 2020 for which they hire an eligible young job seeker aged 16 to 35 years old.

For each eligible employee, employers will receive for a period up to 12 months:

  • $200 a week if they hire an eligible young person aged 16 to 29 years; or
  • $100 a week if they hire an eligible young person aged 30 to 35 years.

Employers must demonstrate that they have increased their overall employment to receive the JobMaker Hiring Credit for a period up to 12 months for each position created. To claim the JobMaker Hiring Credit, employers need to report their employees’ payroll information to the Australian Taxation Office through Single Touch Payroll. 

Elimination of FBT on ‘retraining’

The Government announced before the Budget that it will provide an exemption from Fringe Benefits Tax (FBT) for employer-provided retraining and reskilling, for employees who are redeployed to a different role in the business. The exemption will apply from the 2 October, 2020.

As the Treasurer indicated, currently, FBT is payable if an employer provides training to its employees that is not sufficiently connected to their current employment. For example, a school that retrains their accounts assistant in web design to redeploy them to an online marketing role in the business can get hit with FBT. By removing FBT, employers will be encouraged to help workers transition to new employment opportunities within or outside their business.

The exemption will not extend to retraining acquired by way of a salary packaging arrangement or training provided through Commonwealth supported places at universities, which already receive a benefit. In addition, the Government will consult on potential changes to the current arrangements for workers that undertake training at their own expense. 

Removal of FBT on ‘work-related portable electronic devices’

The Government also announced the extension of a number of small business concessions to businesses with an aggregated annual turnover between $10 million and $50 million.

One of these concessions is that from 1 April 2021, eligible businesses will be exempt from the 47 per cent fringe benefits tax on car parking, not generally relevant to schools, and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.

Reduction in FBT compliance requirements

The Government will provide the Commissioner of Taxation with the power to allow employers to rely on existing corporate records, rather than employee declarations and other prescribed records, to finalise their fringe benefits tax (FBT) returns. The measure will have effect from the start of the first FBT year (1 April) after the date of Royal Assent of the enabling legislation.

Currently, the FBT legislation prescribes the form that certain records must take and forces employers, and in some cases employees, to create additional records in order to comply with FBT obligations.

The measure will allow employers — with what the Commissioner determines as adequate alternative records — to rely on existing corporate records, removing the need to complete additional records. This will reduce compliance costs for employers, while maintaining the integrity of the FBT system. 

Reduced ‘red-tape’ for new early childhood centres

An amount of $18.5 million has been allocated over four years from 2020?21 (with $2.0 million per year ongoing from 2024?25) to streamline approval processes into a single application across jurisdictions, allowing for faster establishment of new early childhood education and care businesses, and employment of their staff. 

ACNC Review Program

The Government will provide $2.9 million over three years from 2020?21 to implement a program of field?based compliance reviews to intervene early where charities are at high risk of failing to meet the obligations under the ACNC governance standards. 

Temporary changes to PPL scheme payments

A concessional work test arrangement for Paid Parental Leave is being introduced in response to COVID?19. Specifically, relaxing the Paid Parental Leave work test for births and adoptions that occur between 22 March 2020 and 31 March 2021 to allow parents to qualify for the payment if they have worked in 10 of the last 20 months, instead of 10 of the last 13 months, preceding the birth or adoption of a child. 

Prioritising Mental Health Initiative

The Government has provided $5.0 million in 2020?21 to provide parents, guardians and carers with mental health and career information for students in the context of the COVID?19 pandemic.  This will be administered through the Departments of Health and Social Services.

General Analysis

The Treasurer was clearly delivering a Budget very different to the 2019-2020 Federal Budget with its predictions of a surplus in each of the four years in the forward estimates.  By contrast, in tonight’s Budget the Treasurer announced projected underlying cash deficit balances of:

  • $213.7 billion in 2020-21,
  • $112 billion in 2021-22,
  • $87.9 billion in 2022-23,
  • $66.9 billion in 2023-24.

As a result the Commonwealth gross debt will rise to a predicted peak in excess of $1.1 trillion.

In an attempt to stimulate spending the Government is bringing forward, and indeed proposing to back-date to 1 July 2020, income tax relief.  The proposals would see the top threshold of the –

  • 19 per cent personal income tax bracket increase from $37,000 to $45,000.
  • 5 per cent personal income tax bracket increase from $90,000 to $120,000.

There are also additional benefits from tax offsets –

  • The low income tax offset (LITO) will increase from $445 to $700. The increased LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of  $37,500 and $45,000. The LITO will then be withdrawn at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.\
  • The low and middle income tax offset (LMITO) will also be retained for the 2020?21 income year, providing further targeted tax relief for low? and middle?income earners.

The LMITO provides a reduction in tax of up to $1,080. It provides a reduction in tax of up to $255 for taxpayers with a taxable income of $37,000 or less. Between taxable incomes of $37,000 and $48,000, the value of the offset increases at a rate of 7.5 cents per dollar to the maximum offset of $1,080. Taxpayers with taxable incomes between $48,000 and $90,000 are eligible for the maximum offset of $1,080. For taxable incomes of $90,000 to $126,000, the offset phases out at a rate of 3 cents per dollar. Consistent with current arrangements, the LMITO will be received on assessment after individuals lodge their tax returns for the 2020?21 income year.

The up to $5,000 in savings reported to be flowing to average families would seem to provide a significant boost to the affordability of school fees.  The Government has released an estimator calculating the impact of the income tax changes at different income levels.  Further details are available in the Government’s factsheet.

The Australian economic outlook is based on projections of significant growth in GDP in 2022-23, unemployment reducing from the same period and modest growth in the CPI and wages –

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