Federal Budget 2020: What it means for your organisation

Federal Budget 2020: What it means for your organisation


October’s federal budget spelled out the Australian Government’s Economic Recovery Plan, which aims to create jobs, rebuild the economy and secure the country’s future. Delivered as the impact of COVID-19 continues to be felt, the budget included tax relief for workers, hiring incentives for employers and payments for pensioners, with the deficit for 2020/21 forecast to stand at $213.7 billion.

To get behind the big announcements and key numbers, we asked seven Nous Group sector leads what the budget means for you. Here’s what they told us.


This budget confirms a shift that has been happening in Australia over several years: a more front-footed industry policy. The role of government – which for decades has been to be the provider of last resort or the responder to market failure – has been re-cast.

This is most evident in $1.3 billion for the Modern Manufacturing Initiative and National Manufacturing Priorities. These funds will be directed to sectors that reflect Australia’s established comparative advantage (in food and resources) or claim new territory (space, renewables and medical products).

This focus is not surprising. Advanced manufacturing has long been seen as a way to create jobs, build export markets and help workers transition from traditional manufacturing. But the volume of funding is noteworthy; coupled with its changed position on research and development tax incentives, the Government is making a strong statement.

The move to unequivocally back priority industry sectors is consistent with state governments’ investment in innovation precincts based around specific industry sectors. It reflects a growing consensus on the need for a more proactive approach to supporting job-creating industries, and echoes research Nous undertook for the Office of Innovation and Science Australia.

As our report noted, execution is key. The challenge is to ensure research dollars and industry grants deliver new products that can be quickly commercialised and scaled. Careful choices are required to make certain that funding serves its purpose, that approaches across different jurisdictions align and that complementary regulation and policy is in place. There will be a need also for balance between pursuing self-sufficiency in certain areas and over-investing in domestic capacity.

Notwithstanding those risks, the budget announcements remove any doubt about where the Government is directing its attention. This is crucial; now more than ever we all need to row in the same direction.

Post-secondary Education

The budget’s $1 billion of new research funding through the Research Package within JobMaker is welcome news for the higher education sector. The one-off allocation is a critical injection of funding but does not resolve important questions about the ongoing sustainability of research in Australia’s universities, particularly given the return of international students to pre-COVID levels is anticipated to take some time. It is therefore critical for institutions to be efficient in their operations, smart about their investments and advocate for the value of their societal impact.

The Job-ready Graduates Package also poses challenges for universities as they respond to revised incentives, but transitional funding in the budget provides some certainty for the next three years. The package presents major opportunities for regional universities and for all institutions to work with industry partners.

Universities will need to understand the detail of the proposals and use the transition time to optimise their academic portfolios and operating models to make the most of what is on offer.

In skills, as anticipated, there was a $1.2 billion investment in an apprenticeship wage subsidy to support 100,000 new or recommencing apprentices. This is likely to be quickly exhausted as employers take advantage of this support. The other significant investment was in skills reform funding, with most funding going to a second attempt at a new Apprenticeship Data Management System and additional resourcing for the Department of Education, Skills and Employment.

Receiving less coverage is the $49.5 million announced to expand the Skills for Education and Employment (SEE) program, which supports jobseekers to obtain the language, literacy and numeracy skills required to succeed in training and employment. With a tightening of the labour market, this will be critical in supporting higher-need learners. More may need to be done in this space if the recovery is slow.

Health and Ageing

COVID-19 dominates the health budget, with big-ticket items being $16 billion for the emergency response and $2.3 billion for treatments and vaccines. The budget also extends Medicare Benefits Schedule (MBS) funding for telehealth to next March and invests in developing options for telehealth beyond COVID-19.

The $33.6 billion increase in hospital funding under the new 2020-25 National Health Reform Agreement will support new immunotherapies, hospital care in the home, and treatment for rare conditions. It also removes incentives that could preference private patients in public hospitals. The budget also makes significant investments in mental health and medical research.

In aged care, the headline is 23,000 home care packages beyond the planned growth at a cost of $1.6 billion. For older people with a disability, $125.3 million will be spent over three years and $91.6 million is committed over two years to continue reform to residential aged care funding.

Missing from this budget is substantial investment in preventative health. While there is continuing funding for GP-led respiratory clinics, there is no significant new funding for primary care. The aged care sector will need to wait until the next budget, when the Federal Government responds to the Aged Care Quality and Safety Royal Commission report due in February, to know whether its hopes for improved funding are realised.

Safety and Security

Unforeseen COVID-19 expenditure has not stymied the Government’s commitment to long-term funding certainty for defence and for Australia’s security interests. The budget locks in the Government’s new defence funding model – foreshadowed in the ‘2020 Defence Strategic Update’ and the ‘2020 Force Structure Plan’ only a few months ago – so that the Department of Defence “can respond to new challenges as they emerge”.

Funding for the department, including the Australian Signals Directorate, will grow to $73.7 billion by 2029-30, with total estimated funding of $575 billion over the decade. Funding for this financial year alone will be almost $43 billion, or 2.2 per cent of GDP, exceeding the government’s target of 2 per cent of GDP by 2020–21.

Major investment priorities include fast-tracking new capability, boosting cyber resilience, nurturing our sovereign defence industry for greater self-reliance, and enhancing Defence’s capability to respond to natural disasters and crises. In aggregate, these investments speak to a firm priority of regional security and local job creation.

Financial Services

The 2020 budget is squarely aimed at stimulating the economy, providing significant support to businesses and individuals – the search for jobs growth is on. For banks and other authorised deposit-taking institutions (ADIs) the measures are important lifelines for retail and business customers.

Bankers will now need more skills than ever, navigating a stimulus-reliant economy, low wages growth and falling population. Risks abound and the potential for bad debts is high. Through the Global Financial Crisis we learnt the value of experienced bankers; there was a lot of quick learning from veterans of past downturns. It is the same now. Since the Hayne Royal Commission there have been significant bank investments to improve governance, risk and accountability, as well as divestment of parts of their businesses, mostly wealth. This has left banks and other ADIs able to focus on their core business.

The budget contains important changes for the superannuation sector that aim to improve the performance of funds and drive better outcomes for members. Many funds will feel the pressure of increasing transparency of fund performance. This may continue the drive for further mergers and acquisitions so funds can achieve economies of scale. But the sector has been slow to move on these, in part due to prohibitive costs for smaller funds in the exploration and due diligence phases.

The budget signals that the government remains focused on superannuation, following the early release scheme. All this means superannuation funds have work ahead of them delivering performance outcomes, demonstrating their value and engaging members through great experiences.

Human Services

This budget maintains economic inclusion as the major strategy for a sustainable welfare system, while sharpening measures to support younger and older Australians impacted by the pandemic. The JobMaker Hiring Credit ($4 billion) and the Boosting Apprenticeships wage subsidy ($1.2 billion) will seek to create 450,000 job opportunities for people aged 16 to 35 and support 100,000 new traineeships or apprenticeships.

The budget directs investment to services for vulnerable people, with funding for domestic and family violence (DFV) measures, mental health supports and social housing. Investments in DFV provide additional capacity to courts and legal supports and extend commitment to 1800RESPECT. There is an additional $133 million to child and family programs and $87 million for Family and Relationship Services. Investments in mental health are maintained, with an additional $101 million in psychological support services.

An additional $3.9 billion has been allocated to the National Disability Insurance Scheme (NDIS) to support the disability sector workforce and services for the approximately 400,000 people with disability supported by the NDIS. This investment will complete the national rollout and invest an additional $800 million in the Quality and Safeguards Commission.

There are concerns the number of people in poverty will increase by as much as 500,000 as supports are phased back. Should this occur we can expect increased demand on charities and not-for-profits for essential services.

It will be necessary to translate investments in services into services for citizens. Funded services face the challenge of supporting people during and after the pandemic. They are responding to needs in a different way or to new needs altogether. The social housing challenge is to ensure investments in social housing meet the needs of people at housing risk.

There are concerns the budget offers more for men than women, given the combined impact of tax relief, employments supports and childcare subsidies.

Schools and Early Childhood Education

The $25 million announced to respond to emerging priorities after COVID recognises the extent to which the pandemic has exacerbated the inequity in Australia’s school education system. Despite commitments by all governments to needs-based funding, a student’s background is still a prime determinant of their educational success and COVID-19 has only made this worse.

Funding to The Smith Family to support disadvantaged youth complete Year 12 and to the Clontarf academies for Indigenous boys and young men is welcome. However, investment is needed at other transition points and for other cohorts (for example students with disabilities) whose challenges worsened during the pandemic.

Victoria’s early childhood education and care services, including after-school care providers, have been boosted through a recovery package that extends through to early next year. Such assistance will be available to providers elsewhere should other jurisdictions go into lockdown.

And STEM continues in the ascendency, with new funding for school-based programs and funds to help women access science careers.

Get in touch to discuss how we can help your organisation make the most of opportunities in the federal budget.

Published on 3 November 2020.