Trevor Collett | May 4, 2016

With a Federal election expected July 2, the Federal Government last night handed down its 2016/17 budget.

Small business owners were the big winners. A lift in the earning threshold from $2 million to $10 million to classify more medium businesses as ‘small’ was accompanied by a one percent tax cut for those businesses.

Middle-income earners were also given a modest reprieve, with the shifting of the 32.5 percent tax bracket from $80,000 to $87,000.

As for motorists and the automotive industry, there was little in the way of new initiatives.

The 2016/17 budget continued programs from the last two Federal budgets, including spending on infrastructure projects such as Sydney’s Northconnex and Westconnex motorways.

Sydney will also benefit from preliminary works to accommodate the second international airport, with planning for road and rail infrastructure.

Perth, Brisbane and Melbourne will each receive Federal money for motorway projects, including the Monash Freeway and Western Ring Road, but the major new announcement was an inland rail link to join Melbourne and Brisbane.

This rail link is expected to lift at least some of the burden from the Newell, Hume and Pacific Highways, as rail freight between the two major ports becomes more attractive.

Other continuing projects include funding the Keys2Drive learner driver program for another 12 months and the $20,000 instant write-down scheme for small business purchases - which now applies to more businesses, thanks to the new revenue threshold.

2016 Toyota HiLux - from $20,990
2016 Toyota HiLux - from $20,990

That’s what’s ‘in’, now for what’s ‘out’.

Off the table, arguably, is the Automotive Transformation Scheme, which will be further wound back as 2020 approaches.

One driver for this decision could be the recent submarine announcement, which will see tens of billions of dollars allocated to a program largely benefiting South Australia.

South Australia and Victoria will be hit hardest by the desertion of Holden, Ford and Toyota from local manufacturing by the end of next year, so the submarine program is likely to reduce some of that burden for SA at least.

Also off the table is any chance that the Luxury Car Tax (LCT) would be scrapped, as the tax didn’t rate a mention last night or in the lead-up to the budget - other than from the car industry.

The unpopular tax will continue unaltered for the foreseeable future, and booming sales from the likes of Audi, BMW and Mercedes-Benz has seen the government revise its expected earnings from the LCT upwards.

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