Government extends tax write off, but why no targeting?

Comment by Peter Roberts

Treasurer Josh Frydenberg has extended companies abilities to instantly write off newly purchased assets worth up to $150,000 in an attempt to boost cash flows as the economy recovers from the Covid-19 pandemic.

The instant write off applies to businesses turning over up to $500 million a year and will remain in place until the end of the year instead of ending on July 1 as previously planned.

While @AuManufacturing’s new deal plan for manufacturing recommended measures to aid investment, Frydenberg’s plan is untargeted.

It treats investment in new plant and equipment – productive assets that would continue to pay off for companies and the economy – equally with unproductive, once off purchases.

So a company wanting to invest in a new 3D printer, for example, is treated the same as those buying a new coffee pot for the staff canteen or a new ute.

The two things are totally different, especially as the everyday items that businesses use are likely to be imported, whereas new equipment contains at least some Australian content in terms of jobs and know-how of system providers.

Canberra has been splashing cash around like a drunken sailor and, unfortunately, much of it is badly targeted.

There are JobKeeper funds for some employees, for example, but not for others.

Cash to support the building industry goes to the relatively well off who own their own homes and ca spend up to $750,000, and not to needy pensioners who might benefit from a new bathroom or household repairs.

Things may be happening fast, but we should expect our taxpayer dollars to be spent wisely.

That means if companies are going to be given assistance to invest, it should be targeted to productive assets first.

That sort of backing is an investment in tomorrow’s prosperity, not just a stopgap supporting today’s GDP figure.

Picture: Josh Frydenberg

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