On Tuesday evening (11 May), the federal budget for 2021-22 was handed down, outlining a range of steps to support home ownership and help small businesses recover from the coronavirus pandemic.
The main home ownership initiatives, such as the new Family Home Guarantee, had been announced ahead of the budget release, which several lenders and players in the mortgage broking industry have already welcomed.
Following the release of the full budget, more lenders issued their thoughts on what it meant for home buyers, small businesses, and the economy as a whole – but also outlined what they thought was missing from the pledges.
ABA: Expedite digital signatures
The Australian Banking Association (ABA) said the budget contained a “welcome mix of support and investment incentives to assist households and businesses across Australia”.
ABA CEO Anna Bligh noted the “welcome measures to further assist first home buyers and single parents to enter the property market”, as well as write-offs.
She said: “Banks have registered a major uptick in lending for equipment purchases by businesses all over the country. [The] extension of temporary full expensing and loss carry-back will keep that trend going.”
The banking association also welcomed the Digital Economy Strategy, including an extra $111 million for the Consumer Data Right, but added that digital signatures should be brought about immediately.
“It’s vital that this investment is backed up with legislation to modernise business communications, including through the permanent use of electronic signatures,” Ms Bligh said.
“This will improve the customer experience and streamline documentation processes. These reforms are long overdue and it’s time to expedite the planned reform.”
ANZ: Budget is surprisingly stimulatory
The CEO of Australia and New Zealand Banking Group (ANZ), Shayne Elliott, said it was the “right budget for these economic times and is good news for Australian industries, households and social services”.
“While it is more stimulatory than many would have anticipated, this reflects the reality that the pandemic still poses risks to our health and economic prosperity and once again shows the government’s flexibility in dealing with the ongoing impacts,” Mr Elliott said.
CBA: Welcome investment into clean energy tech
While CBA had already reacted to the new Family Home Guarantee and expansion of the First Home Loan Deposit Scheme (New Homes) and First Home Super Saver Scheme (FHSSS), the bank’s economists reflected that they would “add to demand for housing”, highlighting that the HomeBuilder grant scheme, which came into play in 2020, had also “supported a large lift in housing supply”.
The chief economist at the Commonwealth Bank of Australia (CBA), Stephen Halmarick, added that the budget “aims to put more people into jobs and push the unemployment rate below 5 per cent by addressing structural issues such as aged care, childcare, home ownership, skills shortages, infrastructure and female labour force participation”.
“Many of the policies also direct assistance to specific areas of the economy where recovery has been uneven and additional fiscal support stands to bridge the gap,” Mr Halmarick said.
“Moreover, the government’s focus on infrastructure upgrades and investment aims to both increase employment and improve the productivity of the Australian economy. In addition, there is a welcome investment into clean energy technology.”
NAB: It is right to continue providing stimulus to businesses
NAB reiterated its support of the home ownership schemes, including Family Home Guarantee, and particularly welcomed the measures to support small businesses, such as the instant asset write-off.
NAB CEO Ross McEwan said the bank had already seen “positive effects” of the current measure that enables businesses to write off the full value of any eligible asset they purchase, noting that equipment finance lending was up 22 per cent year-on-year, “which has helped [NAB] agribusiness customers buy things like tractors, irrigation equipment and earthmovers”.
“NAB continues to lend $2.5 billion a month to Australian businesses, and in recent months we have seen a pipeline of business lending opportunities develop that we have not experienced for many years.
“Australia’s economic recovery and future growth is a shared responsibility and NAB will continue to play its role in helping our customers and the economy prosper,” Mr McEwan said.
The NAB CEO also welcomed the $1.2 billion allocated to the Digital Economy Strategy, which includes helping small and medium businesses build their digital capacity and encouraging more businesses to adopt e-invoicing.
He concluded: “This budget builds on that momentum and will help deliver an increase in business investment and job creation.
“The government has managed health and economic impacts well, and it is right to continue providing stimulus to businesses and the broader economy, with a focus on achieving unemployment below 5 per cent.”
ScotPac: Make the write-off permanent
Non-bank lenders have also welcomed the budget, with ScotPac’s CEO Jon Sutton saying several initiatives “give SMEs a great chance to continue to rebound from the pandemic”, as well as boosting consumer confidence.
“This is a small-business-friendly budget that should give SMEs the confidence to invest in their own growth, as the economic recovery gathers momentum,” Mr Sutton said.
“What this means is it’s time for SMEs to really think about their business plans, about restructuring and about how they’ll fund their continued recovery.”
He particularly welcomed the extended instant asset write-off, which he said would enable SMEs to “buy the vital equipment needed to continue growing”.
However, he called for the write-off to be made a permanent fixture rather than merely being extended until June 2023.
Mr Sutton also applauded the move to extend for another year the loss carry-back provisions for SMEs, with 2022-23 losses able to be written off against a 2018-2019 profit. He said this would be “a boost for solid businesses who took a hit during the pandemic year”.
The CEO also welcomed the $250 million in regional infrastructure spending but suggested that more could have been done.
“Interest rates are so low that now is the time for the government to really accelerate investment in infrastructure – not just in the capital cities but also in regional Australia to allow communities to thrive and decentralisation to continue,” he said.
The ScotPac CEO also called for the abolition of the payroll tax “as this would be an initiative in support of business growth and economic prosperity”.
“It is crucial that business owners have the confidence to grow. Until they are comfortable to invest in their own growth, it will remain difficult for the Australian economy to take off,” Mr Sutton continued.
“I’m hopeful that this small-business-friendly 2021 federal budget will give business owners the confidence to act and provide the impetus for a small-business-led national recovery.”
Westpac: Welcome relief for businesses
Westpac CEO Peter King added that “the additional spending on infrastructure will be a key economic and employment driver and the banking sector will play a vital part in facilitating these projects”.
“It’s particularly pleasing to see ongoing support for the tourism sector, and for business more broadly, the extension of temporary full expensing and loss carry-back rules into 2023 will provide welcome relief for the vast majority of businesses that will benefit”, Mr King said.
[Related: Budget 2021-22 handed down]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.