Treasurer Josh Frydenberg has announced a number of measures, aimed at keeping Australia’s economy on track post-COVID.
The 2020/21 federal budget has defined Australia’s recovery from the COVID crisis as its main priority, with the government’s plan being to create jobs, provide targeted support to businesses and suppress the spread of the virus through the roll-out of the vaccine.
The government is aiming to have a population-wide vaccination program to be in place by the end of the year, with all Australians to receive their two doses by December, but international borders and tourism are not expected to reopen until 2022.
To date, around 2.7 million Australians, or a little more than 10 per cent of the population have been vaccinated since the government began its roll-out in February, Josh Frydenberg confirmed on Tuesday.
The document has described a positive outlook, but it admitted, “considerable risks remain”.
“Australia’s success in containing the health crisis to date has underpinned the economic recovery, but continued growth will rely on the effective containment of any COVID-19 outbreaks in Australia, including those that may arise from any new strains of the virus,” the budget strategy and outlook stated.
Nevertheless, the roll-out of the vaccine and continued fiscal policy support are expected to drive growth – the government has forecast real GDP will grow by 5.25 per cent during the 2021 year, after it fell by 2.5 per cent in 2020.
The underlying cash balance for the government’s budget is also now expected to be a deficit of $161 billion for 2020/21, $52.7 billion lower than what was expected six months ago.
Treasury has forecast unemployment will fall below 5 per cent by late 2022 and will reach 4.75 per cent in the June quarter of 2023.
To gear Australia towards reopening its borders, the budget has allocated $1.9 billion to be invested in the COVID-19 vaccination strategy and a further $1.5 billion to COVID health response measures.
Almost $8 billion ($7.8 billion) has been dedicated to tax relief being offered to low and middle-income earners, expected to inject extra cash into the economy, while businesses can benefit from further tax incentives, including asset write-offs, aiming to encourage investment, growth and hiring.
The government has also made commitments to invest in infrastructure, housing, the JobMaker fund and apprenticeships alongside the engineering construction sector, to further boost job creation.
This year’s budget has further pivoted to a focus on women’s outcomes, after Prime Minister Scott Morrison established a dedicated taskforce earlier this year– with measures targeted towards women’s safety, economic security, and health and wellbeing.
The government has committed $1.9 billion to a Women’s Economic Security Package, including $1.7 billion flowing towards an increased childcare subsidy over five years, for families with second and subsequent children aged five years and under.
It has also scrapped the $450 threshold for mandatory superannuation contributions from employers, benefiting low-income workers, particularly women.
Mr Frydenberg acknowledged the gender gap in superannuation, commenting the removal of the $450 threshold will “improve economic security in retirement for around 200,000 women”.
And around $1 billion has been delegated to implementing a comprehensive digital economy strategy, with the government aiming for Australia to be a leader in the space by 2030.
Other notable items are in health. Following on from the recent royal commission into aged care, the Morrison government has also dedicated $17.7 billion to transforming the aged care system. A further $13.2 billion is being delegated to the National Disability Insurance Scheme and $2.3 billion is being placed towards a National Mental Health and Suicide Prevention Plan.
Women’s economic security
The government has also committed $15.2 billion to new infrastructure projects around Australia, building on its $110 billion 10-year infrastructure pipeline. The commitments are expected to support more than 30,000 direct and indirect jobs. Melbourne intermodal terminal has scored a $2 billion investment under the package, in addition to various other road and rail projects.
The government has placed $1.2 billion towards the creation of Australia’s digital future. It wants Australia to be a “leading digital economy and society” by 2030.
One factor is the consumer data right (or open banking in the banking sector), which will continue to be implemented and the scheme is set to expand to the energy and telecommunications sector.
Another component is the provision of $124.1 million to developing Australia’s artificial intelligence capabilities, including a push for small and medium-sized businesses to adopt AI.
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