Modern Manufacturing Strategy
The Prime Minister has named six priority areas in a plan for grants of $1.5 billion to promote manufacturing: resources and critical minerals; food and beverages; medical products; recycling and clean energy; defence and space.
Insolvency System Reform
- Reforms to support small business include the following:
- The introduction of a new streamlined process to enable eligible incorporated small businesses (broadly, those with liabilities of less than $1 million) in financial distress to restructure their debt.
- Simplifying the liquidation process for eligible incorporated small businesses
- Support for the insolvency sector (to ensure it can respond effectively to increased demand and to the needs of small business).
- Temporary insolvency and bankruptcy protections that were introduced in March 2020 to provide relief for businesses impacted by COVID-19 are due to expire on 31 December 2020. It is expected that the above proposed reforms will provide continued protection for viable businesses when these temporary measures expire.
- These changes are to be effective from 1 January 2021 (subject to the passing of legislation).
Consumer Credit Reforms
- The Government has announced that it will simplify the law through changes to the Credit Act to reduce the time and cost of credit assessments for consumers and businesses and enhance access to credit for small businesses.
- A key feature of the new obligations will be allowing lenders to rely on the information provided by borrowers unless there are reasonable grounds to suspect it is unreliable. Borrowers will be made more accountable for providing accurate information to inform lending decisions, replacing the current practice of ‘lender beware’ with a ‘borrower responsibility’ principle.
- It is intended that these changes will help address the excessive risk aversion, which has progressively entered the system, restricting the flow of credit.
- The Government will consult publicly with stakeholders before finalising any legislation required to implement the reforms.
Read more of our Federal Budget 2020-21 commentary here: