- Economic growth will be 1.25 per cent in 2020-21 and reach a strong 4.25 per cent in 2021-22 before falling to 2.5 per cent the following year.
- Unemployment has defied doomsday predictions of 8 per cent or more and is predicted to be 5.5 per cent this year. Next year it will fall to 5 per cent and then 4.75 per cent in 2022-23.
- International borders will begin to re-open in 2022 but inbound and outbound travellers will remain at very low levels until the middle of 2022 at the earliest.
What you should know – Scott Morrison, Josh Frydenberg and the government will be delighted with these figures. They’re miles better than the doomsday scenarios of a year ago and headed in the right direction.
Debt and Deficit
- The 2020-21 deficit has been revised down by $52.7 billion from $213.7 billion to $161 billion, a massive improvement because of higher employment rates and a higher-than-forecast iron ore price.
- In the three years from 2021-22 deficits have been cumulatively revised down another $29.4 billion – but will still add up to $285.4 billion.
- Net debt is now expected to peak at $980.6 billion in 2024-25, or 40.9 per cent of GDP. That’s a revision down of debt reaching 44 per cent of GDP projected in last year’s budget.
What you should know – the debt levels are eye-watering but the rebound out of recession has been swift and effective. Just don’t ask about when the budget will be back in surplus.
Women and families
- An additional $1.1 billion will be spent on women’s safety measures, including $261.4 million over two years in a new deal with the states to boost frontline family, domestic and sexual violence services.
- There’s $351.6 million in funding for new health measures including more cash for drugs to fight breast cancer, lung cancer and osteoporosis and for women’s health initiatives that cover maternal, sexual and reproductive health. There’s also money for endometriosis research and genetic testing for pregnant women.
- $1.7 billion over five years in extra money to cut the cost of childcare for families with two or more kids. Measures will boost the childcare rebate and remove the annual subsidy cap of $10,560 for high-income earners, aiming to get both parents back into full-time work by removing the disincentive of high childcare costs.
What you should know – the Coalition will be hoping this package sorts out its “women problem” – but the jury is still out, despite going some considerable way with targeted spending.
There is $17.7 billion over five years responding to the Aged Care Royal Commission report on abuse and neglect in the system, including:
- $6.5 billion for an extra 80,000 home care packages over two years, to help more people live in their homes for longer.
- $3.2 billion to cover a $10 per person, per day increase in payment to aged care providers.
- $3.9 billion to increase the number of “care minutes” each aged care resident receives per day to 200 minutes.
What you should know – the sector will likely say this funding is still not enough for aged care workers but it’s a massive down payment on what is needed.
- Another $1.9 billion for the rollout of COVID-19 vaccines
- Another $1.5 billion for COVID-19 health care services, taking the total spend to $20 billion on the vaccine rollout and the health system more broadly.
- Government to invest in mRNA vaccine manufacturing capability onshore. Negotiations are under way with private companies
What you should know – the vaccine rollout has been slower than expected (to put it mildly) but the jabs will become more widely available as the year progresses.
- $7.8 billion to extend the tax relief for 10.2 million people who are low and middle-income earners through the LMITO.
- This extension is worth a maximum of $1080 for individuals and $2160 for couples. The maximum benefits will flow to people on between $48,000 and $90,000 per year.
What you should know – the money that will flow back to families will be welcome but the government has kicked the can down the road on deciding whether to make this a permanent feature of the tax system.
- $15.2 billion over ten years for infrastructure projects across the country.
- $3.2 billion for NSW including $2 billion for upgrades to the Great Western Highway between Katoomba and Lithgow.
- $3 billion for Victoria including $2 billion for a Melbourne freight terminal designed to get thousands of trucks off the road.
- What you should know – there is no single, transformational infrastructure spend in this budget but a careful and conservative approach.
- Temporary full expensing for businesses with a turnover below $5 billion extended for 12 months. Eligible businesses also able to deduct the full cost of assets, with loss carry back also extended
- Tax relief for around 1,000 small brewers and distillers.
- $2.1 billion in targeted support for aviation, tourism, the arts and international education providers
What you should know – the federal government says these measures amount to $20.7 billion in tax relief over the next four years and will drive new investment.
- Employers will be given an extra $1.5 billion to hire 100,000 apprentices and trainees in the next year as the government extends one of its most successful job creation programs for the second time.Loading
- In total, over four years, 270,000 new apprentices and trainees are expected to be hired under this wage subsidy scheme by March next year.
What you should know – governments of all persuasions love to claim credit for creating jobs but the reality is not all schemes work. This one has been a success – unlike JobMaker – that’s why it has been extended.
- $2 billion in funding for preschools and reforms to improve participation
- A total of $19 billion in funding for universities
- 5000 more places in higher education short courses
What you should know – No one will argue with more money for preschool education but after big revenue hits flowing from the loss of international students, universities will be disappointed not to win more funding.
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