Innovation agenda's intangible asset depreciation binned as Canberra saves AU$425m

Lack of parliamentary support for Turnbull's initiative sees the Australian government bank AU$425 million over the next three years.
Written by Chris Duckett, Contributor

The proposed ability for companies to be able to self-assess the effective life of certain intangible depreciating assets has been dropped, allowing the Australian government to keep a hold on AU$425 million in revenue it would have lost had it come into effect.

"Given the lack of parliamentary support the government has decided not to proceed with this measure to provide certainty to business," the government said in its Mid-Year Economic and Fiscal Outlook (MYEFO) for 2018-19 released on Monday.

The range of assets the change would have applied to included patents, registered designs, copyright, in-house software, spectrum licence, and telecommunications site access rights.

The measure was part of then-newly-installed Prime Minister Malcolm Turnbull's AU$1.1 billion National Innovation and Science Agenda.

MYEFO also revealed a cost of AU$564 million to the government's revenue that resulted from the delay to the start of the Regional Broadband Scheme .

Due to the legislation establishing that the Regional Broadband Scheme (RBS) charge to subsidise the National Broadband Network's (NBN) loss-making satellite and fixed-wireless services not being cleared by Parliament before the summer break, the government will see its receipts drop by AU$564 million this financial year.

This drop will be followed by AU$16 million, AU$20 million, and AU$19.7 million expenses in the following years.

The government said the monthly charge to fixed-line broadband customers would now not start until July 1, 2019 at the earliest.

Read also: Australia's 2018 Budget: How the federal government is funding and adopting tech (Free PDF)

The total cost to the budget was pinned at AU$0.1 million over the forward estimates due to the levy being passed onto NBN.

"This difference occurs because the charge would apply from 2019-20 but payments to NBN Co would not begin until 2020-21," MYEFO said.

The papers also flagged an August amendment to the government's AU$20 billion loan to NBN, first announced in November 2016.

The loan was extended for three years to June 30, 2024, but as is standard with financial matters concerning the broadband network, details were not published due to "commercial sensitivities".

"A government loan on commercial terms continues to represent the most cost-effective way to raise necessary debt and secure funding to complete the rollout of this important national infrastructure project," MYEFO said.

"A government loan assists in ensuring NBN Co can focus on the remaining rollout as it significantly scales up toward completion in 2020."

The papers pegged the loan amount by the end of June next year to sit at AU$13.4 million, with NBN to have an interest rate of 3.96 percent on the amount.

Communications Minister Mitch Fifield said in 2016 the loan would improve the government's Budget position.

"The government will get a return ... there's gross debt, there's net debt, but there won't be an increase in net debt," Fifield said at the time.

Due to the difference between commercial and government borrowing rates, the government will be able to make money from the loan in the long term, officials from the Department of Communications explained.

Elsewhere in the MYEFO, government said it will see a AU$51 million boost in revenue as the Australian Taxation Office (ATO) extends its data matching program to include card transactions and taxable government payments.

"The government will provide AU$5.7 million in 2019-20 to the ATO to undertake compliance activities using reported data relating to Government grants and payments and merchant credit and debit cards," the papers said. "This measure is estimated to have a gain to the budget of AU$45.1 million in fiscal balance terms over the forward estimates period."

"This funding will enable the ATO to use the data it obtains from third parties such as other agencies and financial institutions to undertake compliance activities including amending assessments where business taxpayers have not declared income."

The government said the funding would also be used to increase the accuracy of pre-filled tax returns.

For information security, the government said it would spend AU$8 million over two years to make cyber.gov.au into a single source of advice for individuals and small business on information security-related matters, and to "put in place advanced cyber threat detection and warning systems".

The cost will be covered from existing funding allocations.

On the trade war between the United States and China, the outlook was rather rosy.

"Tariffs that have been announced or implemented to date are estimated to affect a little more than 2 per cent of world trade," MYEFO said.

"These measures are expected to have a small negative effect on growth in the United States and China, resulting in a modest downgrade to the forecasts of major trading partner growth."

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