Wayne Swan has delivered a budget which wipes away $1 billion of green building tax breaks, doubles withholding tax and cancels the scheduled cuts to the corporate tax rate.

If you look hard it is possible to find some positive announcements, but the property sector will not welcome this budget.

The Government has walked away from key commitments to productivity growth, a greener built environment and a world class funds management industry.

At a macro level, overall economic growth and employment are expected to remain solid – although with continuing major regional disparities. Inflation is expected to bounce up next year, due partially to the commencement of the carbon price.

The budget is forecast to be back in the black next financial year. Here is a summary of the budget highlights:

View the Property Council's media release
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	F2012	F2013 (forecast)	F2014 (forecast)
Economic growth	3.0%	3.25%	3.0%
Inflation (headline CPI)	1.25%	3.25%	2.5%
Unemployment	5.25%	5.5%	5.5%
Surplus / deficit	($44.4b)	$1.5b	$2.0b
Dwelling investment	(1.0%)	(0.0%)	2.5%
Investment in non-dwelling construction	NA	(0.5%)	3.5%

	Greening the built environment Green building tax breaks dumped
	The Government has scrapped the $1 billion Tax Breaks for Green Buildings program. The tax scheme was designed to turbo-charge the green retrofitting of buildings and was due to commence on 1 July 2012 after a one-year postponement. The green building tax breaks were the first major commitment of Julia Gillard as Prime Minister. The Coalition is on record backing direct action to incentivise investment in green retrofits. The Property Council will now step up its engagement with both the Opposition and Greens on this issue. Other minor sustainability measures include: $2.8 million to help improve the NABERS and NatHERS rating tools, and tweaking the commercial building mandatory disclosure regime; and, $3 million for the development of a climate change adaption policy.

	Tax Capital flows – withholding tax doubles
	The managed investment trust withholding tax rate will double from 7.5% to 15% from 1 July 2012, undoing all of the Government’s good work since 2007. In addition, the government has scrapped CGT discount for non-residents. This further discourages foreign investment in Australia. These moves send a simple message to the world that we do not welcome investment at the very time Australia is firmly on the international investment radar. On a positive note, superannuation guarantee contributions will begin stepping up from 2013, starting at 9.25%, before edging to 12% in 2019. Other tax measures: The Government has squibbed its plan to lower the corporate tax rate, instead opting to increase direct family support payments and fund a tax loss carry-back scheme. The 50% discount for interest income announced just two years ago has been scrapped. The budget reduces tax concessions on superannuation contributions of individuals on incomes greater than $300k per year. The NSW and South Australian treasurers continue to work with other state governments to develop a long-term state tax reform plan.

	Housing
	There were no significant housing announcements. The National Rental Affordability Scheme (NRAS) continues through to F2014, with only 10,000 homes to be tendered before the scheme runs out of financial juice. There is no word on the additional 50,000 home incentives promised by the Government.

	Infrastructure
	The budget contains only three major new infrastructure projects – all flagged over the past week: an additional $3.6 billion for upgrading the Pacific Highway from F2014, on the basis that the NSW Government provides matching funds; $232 million in 2015/16 for the Torrens and Goodwood Junctions rail project to separate Adelaide’s passenger and rail freight networks, on the basis that the South Australian Government provides matching funds; and funding to establish a government business enterprise to redevelop Moorebank in Sydney as an intermodal freight terminal. More information: More details are available from the Property Council’s strategic ally Infrastructure Partnerships Australia at www.infrastructure.org.au

	Misc.
	$37.8 million has been allocated to implementing reforms to the Environmental Protection and Biodiversity (EPBC) Act, including: improved environmental impact assessment processes; moving towards landscape-based environmental protection approaches; improving the process for identifying and managing species and environments under threat; simplifying listing processes for national and Commonwealth heritage and improving protection of indigenous heritage; and, strengthening the arrangements for the five-yearly State of the Environment Report. The Government has provided slightly more detail on its $3.7 billion dollar aged care package, which can be found on our website. Skilled migration will increase by 5000 places next financial year, bringing the migration program up to 190,000. The Government will create an Australian Small Business Commissioner next financial year to represent small business interests ($8.3 million over four years) – this represents a red flag for many property owners. An extra $6.9 million over four years has been allocated to support the Government’s deregulation agenda, including the remaining Seamless National Economy reforms occurring under COAG. $11.9 million will be provided to the National Capital Authority over four years.