Everything HR needs to know about the 2021 Federal Budget


Tax cuts, skills development and support for women are at the heart of a budget that the Coalition hopes will create jobs and ease pressure on overstretched families.

Josh Frydenberg’s headline-grabbing decision to include more than $29bn in business and personal tax cuts in the Federal Budget was just one of several unexpectedly bold moves that the Coalition hopes will help the Australian economy recover post-COVID.

In a budget that surprised many with its largesse, Frydenberg also pledged $15.2bn for infrastructure and $2.7bn to subsidise the cost of apprentices and trainees.

Money was spent on several hot-button social issues, too: the government announced $1.7bn for childcare subsidies, $1.1bn to be invested in women’s safety and $2.3bn to support those living with mental health challenges.

These are just some of the topline issues. Here’s everything else HR needs to know about the 2021 Federal budget.

1. Tax matters

In 2020, the government received widespread praise for its economic response to the pandemic. The subsequent bounce-back in Australia’s fiscal fortunes, which Deloitte characterised as a “red hot recovery,” seems to have given the Coalition confidence to extend some of last year’s tax breaks, primarily for business. 

The big-ticket item is a 12-month extension of the rules that allow most businesses turning over less than $5bn to deduct or “expense” the full cost of assets they purchase, no matter how much those assets cost. 

These businesses can also “carry back” economic losses they made as a result of COVID to bring down their profits in pre-COVID years. 

Combined, these measures are worth an estimated $20.7bn. The government hopes they will A) encourage businesses to invest in themselves by purchasing assets, such as machinery and office items, and B) create optimism about the future, and encourage hiring, by lessening the tax burden for most businesses over the next two years.   

There’s also an income tax offset for low and middle-income earners in the 2021-2022 financial year, mirroring the cut already announced for 2020-2021. It’s worth $7.8bn ($1,080 for individuals or up to $2,160 for couples).

2. Unemployment surprises

The announced tax cuts have been factored into a new, rosier unemployment outlook.

In the government’s previous economic update in December, unemployment for the 2021-22 financial year was forecast at 6.25 per cent, but this has now been revised down to 5 per cent, lower than the pre-pandemic level of 5.1 per cent.

In 2022-23, unemployment is expected to fall further, to 4.75 per cent, according to the budget.

3. Support for women and families

The inclusion in this year’s budget of a separate 81-page Women’s Statement signalled that the Coalition is taking the calls of Australians seriously (although, it can’t really afford not to with whispers of a potential 2021 election on the horizon). 

In his speech, Frydenberg said: “One in four women experience violence from a current or former partner. This must stop. We must do more to end all forms of violence against women and children.”

The Coalition has been roundly criticised for its response to recent sexual harassment revelations and to the subsequent Respect@Work report, and for not doing enough to support women in the 2020 Budget. In response, it has announced big spending measures which include funding for each state and territory (up to $261.4m) to expand frontline services for women’s safety; $164.8m over three years to establish escaping violence payments nationally; and $20.5m for the implementation of the Respect@Work report recommendations. 

In total, $1.1bn was promised for women’s safety.

“AHRI is very pleased to see the government committing funding to the implementation of the Respect@Work inquiry recommendations – this provides the opportunity for sexual harassment in the workplace to be addressed properly across Australian workplaces,” says the Australian HR Institute’s CEO Sarah McCann-Bartlett.

Childcare receives additional funding, too. Although there will be no return to fully subsidised childcare, families with two or more children will be able to claim up to 95 per cent in subsidies from July 2022, depending on their income. 

The annual cap on childcare payments will be removed for all families. The Coalition says 250,000 families stand to benefit.

“The increased childcare subsidies are a positive outcome for families as well as employers who need higher workforce participation from women,” says McCann-Bartlett.

“However, the increases don’t start until 2022, and families with only one child or one child in childcare will miss out. It would have been great to have seen an earlier start and broader coverage to get women back into the workforce faster.”

Expanding on this, McCann-Bartlett says she’s disappointed the government didn’t extend the duration of paid parental leave where both parents share the early parental leave.

“This is a lost opportunity as when both parents share parental leave, everyone benefits.

“This is a community, economic growth, employer and family issue. If women aren’t participating in the workforce because of the limits of Australia’s paid parental leave scheme… then women’s workplace participation falls, gender inequality rises, organisations face skills shortages, gender diversity in the workplace is reduced, organisations’ performance suffers and economic recovery is slower.”

4. Mental Health and skilled migration

Mental health and suicide prevention has received a total of $2.3 billion in funding, which will include a new network of mental health counselling clinics for Australians over 25, funds for ten new Headspace clinics, funds to boost suicide prevention programs and follow-up care for those discharged from hospital after a suicide attempt.

If you, or someone you know, needs immediate assistance you can call the Lifeline crisis hotline on 13 11 14.

Rosemary Guyatt FCPHR, general manager of people and culture at AHRI, says any funding allocated towards mental health initiatives is a positive thing. However, she notes there are some larger challenges at play.

“People seeking support still face long wait times and there’s still a worrying shortage of skilled psychologists and psychiatrists in Australia,” says Guyatt.

“On top of this, with borders not due to open until mid 2022, this puts even more pressure on various industries, such as the mental health sector, as we can’t rely on skilled migrants and international students to fill these critical gaps.”

It is going to be a highly competitive market for skills, adds McCann-Bartlett, so it’s important employers prepare their local workforce as best they can.

“Employers will need to anticipate their organisation’s future workforce needs. The budget responds to this with a variety of measures [see below], as well as an Employee Share Scheme reform aimed to make tech companies more attractive to potential talent. 

“However, employers shouldn’t be relying on these measures alone. They need to invest in training, upskilling and utilising their people professionals to map out and plan for the organisation’s future skills needs,” she adds. 

“If women aren’t participating in the workforce… gender inequality rises, organisations face skills shortages, gender diversity in the workplace is reduced, organisations’ performance suffers and economic recovery is slower.” – Sarah McCann-Bartlett, CEO, AHRI.

5. Training and the digital economy

Of the roughly $4bn promised for skills development, some $2.7bn will go to expanding wage subsidies for businesses that take on newly commencing trainees and apprentices. Any business that takes on a trainee or apprentice before 31 March 2022 can now claim a 50 per cent subsidy for 12 months. Payments are capped at $7,000 per quarter, per trainee.

The JobTrainer fund will receive a $500m boost over two years, funding 33,800 training places in aged care and 10,000 spots in digital services. On top of this, $43.8m has been allocated to a cyber security skills partnership innovation fund to bolster employee skills in various sector and over 230 scholarships will be created (costing$22.6m) to get more talent into emerging tech industries.

Dr Ben Hamer, future of work lead at PwC and recently appointed AHRI board member, was pleased to see a significant investment in skills and training in this budget, noting that Australia’s high amount of job vacancies paired with the large number of people looking for work indicates a worrying skills gap.

“[This is] a signal that the government is looking to business to fund worker upskilling and reskilling.” – Dr Ben Hamer, future of work lead, PwC and AHRI board member.

“The budget targets investment in upskilling the long-term unemployed, building foundational skills for those struggling to find work, and focusing on key industries that are impacted by low skilled migration and mobility,” he says.

“There’s also a nod to directly driving female participation for targeted cohorts, with 2,700 places in Indigenous girls’ academies and a stimulus to support 5,000 women enter non-traditional trades.”

However, Hamer feels not enough has been allocated to upskilling employed workers, stating that current measures targeting jobseekers are a good way to increase participation, but it will likely result in a boost in lower skilled roles only.

“[This is] a signal that the government is looking to business to fund worker upskilling and reskilling,” says Hamer.

The $1.2 billion commitment to the digital economy, however, looks promising, he adds.

“We are pleased to see the focus on digital skills, which we see as critical to economic security. But it’s also necessary, with other budget announcements around telehealth, digital services, cyber security, and investing in advanced industries.

“While we would like to have seen more of a focus on digital skills, it is a step in the right direction and we hope to see the government build on this in future budgets.”

6. Coronavirus, continued

A $1.9bn funding boost will accelerate the rollout of the COVID-19 vaccines, allowing any Australian seeking vaccination to receive two doses by the end of 2021, according to Frydenberg. 

Of that total, $1.2bn will go to partnership agreements with the states and territories to deliver vaccinations. Money will also be spent on monitoring and advertising the roll out.

“One of the budget assumptions is that the COVID-19 vaccine will be fully rolled out by the end of 2021,” says Guyatt. “With high levels of vaccine hesitancy in the community, employers can play a positive role in encouraging vaccination and ensuring employees have access to factual information and data.”

guest
3 Comments
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Max Underhill
Max Underhill
4 months ago

While the training support in the budget was great I think it was a pity that the lessons learnt from the Enterprise Based Vocational Training used in the economic recovery in early 1990. This was highly effective and focused on broader competency development.

Dr Sue Hanley
Dr Sue Hanley
4 months ago

Seems to paint a rosy picture. It would have been wise to include a bit more balance.

Catherine
Catherine
4 months ago

I am a bit horrified that McCann-Bartlett frames childcare as a purely female issue. We need to attack the notion that only women care for children, and build into our workforce the expectation that men care for their children as well. As long as it continues to be seen (and promoted) as a women’s only issue, the structural inequities that ensure women earn less and have less superannuation will be perpetuated. Shouldn’t AHRI be actually leading the thought process on this issue, rather than just continuing with the status quo?

More on HRM

Everything HR needs to know about the 2021 Federal Budget


Tax cuts, skills development and support for women are at the heart of a budget that the Coalition hopes will create jobs and ease pressure on overstretched families.

Josh Frydenberg’s headline-grabbing decision to include more than $29bn in business and personal tax cuts in the Federal Budget was just one of several unexpectedly bold moves that the Coalition hopes will help the Australian economy recover post-COVID.

In a budget that surprised many with its largesse, Frydenberg also pledged $15.2bn for infrastructure and $2.7bn to subsidise the cost of apprentices and trainees.

Money was spent on several hot-button social issues, too: the government announced $1.7bn for childcare subsidies, $1.1bn to be invested in women’s safety and $2.3bn to support those living with mental health challenges.

These are just some of the topline issues. Here’s everything else HR needs to know about the 2021 Federal budget.

1. Tax matters

In 2020, the government received widespread praise for its economic response to the pandemic. The subsequent bounce-back in Australia’s fiscal fortunes, which Deloitte characterised as a “red hot recovery,” seems to have given the Coalition confidence to extend some of last year’s tax breaks, primarily for business. 

The big-ticket item is a 12-month extension of the rules that allow most businesses turning over less than $5bn to deduct or “expense” the full cost of assets they purchase, no matter how much those assets cost. 

These businesses can also “carry back” economic losses they made as a result of COVID to bring down their profits in pre-COVID years. 

Combined, these measures are worth an estimated $20.7bn. The government hopes they will A) encourage businesses to invest in themselves by purchasing assets, such as machinery and office items, and B) create optimism about the future, and encourage hiring, by lessening the tax burden for most businesses over the next two years.   

There’s also an income tax offset for low and middle-income earners in the 2021-2022 financial year, mirroring the cut already announced for 2020-2021. It’s worth $7.8bn ($1,080 for individuals or up to $2,160 for couples).

2. Unemployment surprises

The announced tax cuts have been factored into a new, rosier unemployment outlook.

In the government’s previous economic update in December, unemployment for the 2021-22 financial year was forecast at 6.25 per cent, but this has now been revised down to 5 per cent, lower than the pre-pandemic level of 5.1 per cent.

In 2022-23, unemployment is expected to fall further, to 4.75 per cent, according to the budget.

3. Support for women and families

The inclusion in this year’s budget of a separate 81-page Women’s Statement signalled that the Coalition is taking the calls of Australians seriously (although, it can’t really afford not to with whispers of a potential 2021 election on the horizon). 

In his speech, Frydenberg said: “One in four women experience violence from a current or former partner. This must stop. We must do more to end all forms of violence against women and children.”

The Coalition has been roundly criticised for its response to recent sexual harassment revelations and to the subsequent Respect@Work report, and for not doing enough to support women in the 2020 Budget. In response, it has announced big spending measures which include funding for each state and territory (up to $261.4m) to expand frontline services for women’s safety; $164.8m over three years to establish escaping violence payments nationally; and $20.5m for the implementation of the Respect@Work report recommendations. 

In total, $1.1bn was promised for women’s safety.

“AHRI is very pleased to see the government committing funding to the implementation of the Respect@Work inquiry recommendations – this provides the opportunity for sexual harassment in the workplace to be addressed properly across Australian workplaces,” says the Australian HR Institute’s CEO Sarah McCann-Bartlett.

Childcare receives additional funding, too. Although there will be no return to fully subsidised childcare, families with two or more children will be able to claim up to 95 per cent in subsidies from July 2022, depending on their income. 

The annual cap on childcare payments will be removed for all families. The Coalition says 250,000 families stand to benefit.

“The increased childcare subsidies are a positive outcome for families as well as employers who need higher workforce participation from women,” says McCann-Bartlett.

“However, the increases don’t start until 2022, and families with only one child or one child in childcare will miss out. It would have been great to have seen an earlier start and broader coverage to get women back into the workforce faster.”

Expanding on this, McCann-Bartlett says she’s disappointed the government didn’t extend the duration of paid parental leave where both parents share the early parental leave.

“This is a lost opportunity as when both parents share parental leave, everyone benefits.

“This is a community, economic growth, employer and family issue. If women aren’t participating in the workforce because of the limits of Australia’s paid parental leave scheme… then women’s workplace participation falls, gender inequality rises, organisations face skills shortages, gender diversity in the workplace is reduced, organisations’ performance suffers and economic recovery is slower.”

4. Mental Health and skilled migration

Mental health and suicide prevention has received a total of $2.3 billion in funding, which will include a new network of mental health counselling clinics for Australians over 25, funds for ten new Headspace clinics, funds to boost suicide prevention programs and follow-up care for those discharged from hospital after a suicide attempt.

If you, or someone you know, needs immediate assistance you can call the Lifeline crisis hotline on 13 11 14.

Rosemary Guyatt FCPHR, general manager of people and culture at AHRI, says any funding allocated towards mental health initiatives is a positive thing. However, she notes there are some larger challenges at play.

“People seeking support still face long wait times and there’s still a worrying shortage of skilled psychologists and psychiatrists in Australia,” says Guyatt.

“On top of this, with borders not due to open until mid 2022, this puts even more pressure on various industries, such as the mental health sector, as we can’t rely on skilled migrants and international students to fill these critical gaps.”

It is going to be a highly competitive market for skills, adds McCann-Bartlett, so it’s important employers prepare their local workforce as best they can.

“Employers will need to anticipate their organisation’s future workforce needs. The budget responds to this with a variety of measures [see below], as well as an Employee Share Scheme reform aimed to make tech companies more attractive to potential talent. 

“However, employers shouldn’t be relying on these measures alone. They need to invest in training, upskilling and utilising their people professionals to map out and plan for the organisation’s future skills needs,” she adds. 

“If women aren’t participating in the workforce… gender inequality rises, organisations face skills shortages, gender diversity in the workplace is reduced, organisations’ performance suffers and economic recovery is slower.” – Sarah McCann-Bartlett, CEO, AHRI.

5. Training and the digital economy

Of the roughly $4bn promised for skills development, some $2.7bn will go to expanding wage subsidies for businesses that take on newly commencing trainees and apprentices. Any business that takes on a trainee or apprentice before 31 March 2022 can now claim a 50 per cent subsidy for 12 months. Payments are capped at $7,000 per quarter, per trainee.

The JobTrainer fund will receive a $500m boost over two years, funding 33,800 training places in aged care and 10,000 spots in digital services. On top of this, $43.8m has been allocated to a cyber security skills partnership innovation fund to bolster employee skills in various sector and over 230 scholarships will be created (costing$22.6m) to get more talent into emerging tech industries.

Dr Ben Hamer, future of work lead at PwC and recently appointed AHRI board member, was pleased to see a significant investment in skills and training in this budget, noting that Australia’s high amount of job vacancies paired with the large number of people looking for work indicates a worrying skills gap.

“[This is] a signal that the government is looking to business to fund worker upskilling and reskilling.” – Dr Ben Hamer, future of work lead, PwC and AHRI board member.

“The budget targets investment in upskilling the long-term unemployed, building foundational skills for those struggling to find work, and focusing on key industries that are impacted by low skilled migration and mobility,” he says.

“There’s also a nod to directly driving female participation for targeted cohorts, with 2,700 places in Indigenous girls’ academies and a stimulus to support 5,000 women enter non-traditional trades.”

However, Hamer feels not enough has been allocated to upskilling employed workers, stating that current measures targeting jobseekers are a good way to increase participation, but it will likely result in a boost in lower skilled roles only.

“[This is] a signal that the government is looking to business to fund worker upskilling and reskilling,” says Hamer.

The $1.2 billion commitment to the digital economy, however, looks promising, he adds.

“We are pleased to see the focus on digital skills, which we see as critical to economic security. But it’s also necessary, with other budget announcements around telehealth, digital services, cyber security, and investing in advanced industries.

“While we would like to have seen more of a focus on digital skills, it is a step in the right direction and we hope to see the government build on this in future budgets.”

6. Coronavirus, continued

A $1.9bn funding boost will accelerate the rollout of the COVID-19 vaccines, allowing any Australian seeking vaccination to receive two doses by the end of 2021, according to Frydenberg. 

Of that total, $1.2bn will go to partnership agreements with the states and territories to deliver vaccinations. Money will also be spent on monitoring and advertising the roll out.

“One of the budget assumptions is that the COVID-19 vaccine will be fully rolled out by the end of 2021,” says Guyatt. “With high levels of vaccine hesitancy in the community, employers can play a positive role in encouraging vaccination and ensuring employees have access to factual information and data.”

guest
3 Comments
Inline Feedbacks
View all comments
Max Underhill
Max Underhill
4 months ago

While the training support in the budget was great I think it was a pity that the lessons learnt from the Enterprise Based Vocational Training used in the economic recovery in early 1990. This was highly effective and focused on broader competency development.

Dr Sue Hanley
Dr Sue Hanley
4 months ago

Seems to paint a rosy picture. It would have been wise to include a bit more balance.

Catherine
Catherine
4 months ago

I am a bit horrified that McCann-Bartlett frames childcare as a purely female issue. We need to attack the notion that only women care for children, and build into our workforce the expectation that men care for their children as well. As long as it continues to be seen (and promoted) as a women’s only issue, the structural inequities that ensure women earn less and have less superannuation will be perpetuated. Shouldn’t AHRI be actually leading the thought process on this issue, rather than just continuing with the status quo?

More on HRM