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2019 Budget - What does it mean for blockchain in Australia?

April 3, 2019

Crypto markets reaching their highest levels since November last year was arguably only the second most exciting thing to happen in the last 24 hours as the Federal government handed down its last budget before the upcoming election. Scott Morrison and Josh Frydenberg’s first budget focussed on four key themes around returning to a surplus, delivering more jobs, lowering taxes and guaranteeing essential services.

If, like most (uncool) people, you don’t get excited by the budget being handed down and want the shorter version, here's what it means for blockchain and fintech in Australia.

The major news

  • Forecast surplus of $7.1bn for 2019/20;
  • $158bn of tax cuts including a rebate for up to $1,080 for low to middle income earners;
  • Personal income tax rates lowered over 5 years;
  • $284m to assist Australians with the cost of power bills;
  • $100bn over a decade focussed on infrastructure projects;
  • $737m on mental health care initiatives;
  • $3.5bn for climate solutions;
  • Incentives for small business;
  • Focus on tax evasion for multinationals and the black-market economy;
  • Up to 80,000 new trade apprenticeships over 5 years and employer incentives.

ASIC Funding

Outside of the personal income tax reductions and rebate, ASIC funding changes is arguably one of the biggest measures that may have an impact on the blockchain and fintech space. As many entrepreneurs have lamented the lack of ASIC resources when launching new fintech products (WA is only just getting its first ASIC executive based in Perth working on fintech licensing and start-up regulation).

One of the key messages within the budget was a focus on restoring trust in Australia’s financial system. As a result of this the Government has committed $606.7m over five years to follow through on the findings and recommendations of the Royal Commission. After years of funding challenges, the key beneficiary of this measure is the Australian Securities and Investment Commission (ASIC) which will receive $404.8m over 5 years for enforcement and expanding its capabilities.

ASIC’s own budget statements reflect a focus on programmes of building investor and consumer trust in financial markets. As the key regulatory bodies in Australia covering ICOs and STOs, there is a strong likelihood of initiatives flowing through to blockchain and fintech companies operating in the financial markets.

Austrac-Fintel Alliance

Austrac will receive $28.4m over four years to expand the Fintel Alliance, a public-private partnership focussed on anti-money laundering and counter terrorism financing activity.

Budget papers note that this measure will be funded through an increase in the AUSTRAC industry contribution levy. Australian crypto exchanges report trades to AUSTRAC as part of the Australian Digital Currency Code of Conduct.

Digital ID with GovPass

$67.1m to be provided in FY2020 to continue the government’s GovPass program as part of the overall digital transformation program. GovPass is a digital identify solution aimed at Australian citizens access government services online. The funding will be used to roll out pilot programs and then moving on to a full roll out. While no blockchain component has been specifically highlighted, technology experts including DigitalX have been talking about the benefits of blockchain-based digital identity and we hope to see the tech incorporated at a government level.

Electronic Invoicing

$1.0m for DHS to implement and adopt e-invoicing and $1.3m for the ATO to establish a local PEPPOL authority to oversee the e-invoicing framework.

Other notable items

  • $10.8m for the Australian Electoral Commission to upgrade existing polling ICT infrastructure.
  • $3.4m for gender equality initiatives in STEM.
  • $6.5m continued funding for the digital transformation agency.
  • $3.6m over two years for expansion of Innovation Games.
  • Undisclosed amount for whole of government cyber security measures.
  • $60,000 for Standards Australia to continue development of international blockchain standards.

The information in this article is general in nature. Any advice it contains is general advice only and has been prepared without taking into account the objectives, financial situation or needs of any particular person. The article content is not intended to be a substitute for professional advice and readers are urged to seek their own appropriate advice before making decisions. Any reference to a particular investment is not a recommendation to buy, sell or hold the investment.

Author: Jonathon Carley, CA, FGIA, DigitalX Ltd Head of Finance