Business and households will receive $29 billion in surprise tax cuts and $18 billion will be spent repairing a creaking aged care system as part of a big spending Budget that aims to consolidate Australia’s strong economic recovery.
The Morrison Government has also announced a raft of measures to claw back support from female voters, including a $1.1 billion “women’s safety” package that includes measures to tackle domestic violence and sexual harassment.
But it has shied away from tough structural reforms and ditched its debt-and-deficit mantra in favour of a Budget that sets the scene for a possible early election.
Declaring that Australia’s economic engine is roaring back to life, Treasurer Josh Frydenberg’s third Budget paves the way for the Coalition to call an election later this year. The Budget forecasts that unemployment will fall below 5 per cent by 2023, offering the Government a positive economic message to sell to sceptical voters.
The Coalition has moved to lock in the support of small business with a range of measures that will prove popular with tradies and SMEs who are using online platforms to sell to the world.
The tax write-off for eligible assets – such as new utes and essential equipment – will be extended with the Government claiming it will benefit 99 percent of companies in Australia, employing more than 11 million people.
But big business will also be offered new incentives to hire younger workers and invest in their skill levels with the JobTrainer Fund supporting a total of 450,000 new training places.
Australia’s infrastructure boom has been given another boost with an additional $15 billion announced, including a raft of projects in marginal seats.
Small business will be given new powers to negotiate debts incurred with the Australian Tax Office.
And the Budget also includes a new measure – a patent box – that aims to enhance Australia’s reputation for inventing products. The scheme will offer a tax concession to boost innovation in medical and biotechnology with the Government hoping the scheme will attract foreign investment and develop a new wave of local entrepreneurs.
The Budget includes a focus on specific measures for women – including additional funding for childcare, superannuation and tackling the scourge of domestic violence. An 80-page women’s statement was issued as part of the Budget, reflecting the Morrison Government’s concerns that it had lost support over its handling of recent scandals.
Another big winner from the Budget is aged care with the sector digesting a $17.7 billion commitment to overhauling the system in response to last year’s
Another 80,000 home care packages will be funded, bringing the national total to 275,000. And the Government is also promising to hire more carers and nurses – and to improve their pay and conditions – in a bid to improve the quality of residential facilities.
With nearly half of these residential facilities losing money, the Budget also includes hundreds of millions of dollars to upgrade essential infrastructure in regional and rural communities.
The Budget includes $2.3 billion for mental health care and suicide prevention. This will include more Headspace centres and a new National Suicide Prevention Office.
Australia’s stunning economic resilience has been reflected in the Budget with economic growth forecast to reach 4.25 percent in 2021/22.
Unemployment is also forecast to dip below 5 per cent by 2023 as the Government pump primes the economy to ensure Australia remains a global leader.
Mr Frydenberg talked up the level of jobs growth in his Budget speech, revealing that unemployment – at 5.6 per cent today – is lower than when the Coalition was first elected.
However it is a big spending budget and despite soaring iron ore prices, the Budget deficit is now forecast to reach $161 billion this year while Australia will still be in the red – to the tune of $57 billion – by 2024-25.
Net debt will increase to $617.5 billion or 30.0 per cent of GDP this year and peak at $980.6 billion or 40.9 per cent of GDP in June 2025.
But with more Australians back at work, this year’s deficit is $52.7 billion lower than was expected just over 6 months ago in last year’s Budget.
Business has offered qualified support for the Budget with the Business Council of Australia welcoming the overall direction. BCA chief executive Jennifer Westacott said the Budget showed Australia was “on the right track” but she also raised concerns about the low growth rates in the outer years of the forward estimates.
Tourism and other key stakeholder groups raised concerns that more was not being done to assist sectors that have been hit particularly hard by COVID-19.
Labor – which will have its chance on Thursday to offer an alternative economic program to the nation – said the Government’s “heart was not in it”.
The Shadow Treasurer Jim Chalmers said the Government had left the Budget a trillion dollars in debt with nothing to show for it.