Federal Budget Key Takeaways for Brokers
The Federal Government’s 2021-22 budget “keeps the gas on the accelerator” with a significant focus on stimulating the economy, supporting small businesses, incentivising homebuyers, and creating jobs, providing many opportunities for brokers and their clients.
In Connective’s recent Federal Budget webinar, Executive Director Mark Haron and Westpac Group’s Business Bank Chief Economist, Besa Deda, unpacked the key initiatives and how they will affect the broking industry, small businesses and the housing market.
Let’s start with the good news: Australia’s pandemic recovery has been faster and stronger than the government and economists expected with an economic retraction of only 1.1% instead of the 5-7% forecast, and unemployment currently at 5.6%. Nevertheless, there are some uncertainties and risks with COVID-19 still rampant in parts of the world, Deda said.
In a February survey of businesses conducted by the Australian Bureau of Statistics, business owners said they were struggling most with COVID-19 restrictions, reduced cash flow and snags in international supply chains.
This budget addresses some of those issues by giving businesses a boost through tax incentives and other initiatives, which in turn should create jobs, stimulate investment and strengthen consumer confidence and spending. For brokers, their clients, small businesses and first homebuyers, this budget was a ‘win’ and sets Australia up for continued economic growth.
So how can brokers leverage the key budget initiatives to grow their businesses and support their clients? We explain below.
How the Federal Budget supports small businesses
For 99% of Australian businesses, the big ticket item was the extension of the instant asset tax write-off, which allows them to deduct the full cost of eligible depreciable assets that are used or installed by 30 June 2023. The 12-month extension gives businesses more time to plan how they want to take advantage of this incentive.
The temporary loss carry-back rule was also extended for a year. This allows companies with domestic annual turnovers of up to $5 billion to carry-back tax losses from the 2022-23 income year to offset previously taxed profits as far back as the 2018-19 income year. The government said this will increase cash flow and support companies that were profitable but found themselves in a loss position during the pandemic.
Opportunity for brokers: Is there something you or your SME clients have been putting off buying? Now might be the right time to invest in equipment or tools to support business growth, expansion and productivity.
For our members we’ve created special email marketing templates outlining these key initiatives from the budget that they can send to their SME clients through our industry-leading complete business tool Mercury Nexus Nexus or our marketing platform Digital Marketing Hub. By keeping your clients informed of the changes and how these initiatives could help them, you may be able to generate new leads.
How the Federal Budget supports home ownership
National house prices grew at their fastest rate in 32 years in April, and are expected to continue accelerating this year, Deda said.
It’s anticipated that national dwelling prices will continue to grow 15-20% and macro-prudential tightening will come into play in early to mid-2022 as investor demand picks up, she added.
This upturn in dwelling prices has created momentum in building approvals and residential construction activity, helping drive economic growth.
The budget included several policies to increase home ownership participation, measures that will no doubt benefit mortgage brokers’ businesses.
- Family Home Guarantee will help 10,000 single parents buy or build a home over four years with a minimum deposit of 2%.
- First Home Loan Deposit Scheme will be extended for a second year with an additional 10,000 places for first homebuyers to build or buy a newly built house with a minimum 5% deposit.
- First Home Super Saver Scheme has increased the amount of money to $50,000 from $30,000 that first homebuyers can take out of their own contributions to their superannuation fund.
How can you leverage the Budget initiatives to grow your broking business?
1. Support existing clients: Over the last year, brokers have stepped up to support their clients through very challenging times, from fires to floods, droughts, and a pandemic. With the property market expected to keep accelerating and the extension to the instant asset tax write-off, mortgage and asset finance brokers have many opportunities to engage and assist their clients in this environment. The first step is letting them know how.
2. Strategically explore new segments: We all get bombarded with email marketing campaigns. The ones that work are the ones that are strategic and relevant to the client’s particular interests and needs. In Digital Marketing Hub and Mercury Nexus, you can automate sending the right email to the right person to increase the chance they’ll open it.
3. Invest in your business to grow: The Budget measures aren’t just going to benefit your clients.Get in touch with the Connective team about how you can make the most of the tax and staffing incentives to set your business up for success this financial year.