The Morrison Government has targeted voters in must-win electorates with a multi-billion-dollar Budget package aimed at easing cost-of-living pressures.
Throwing conservative economic doctrine out the window, the fuel excise will be slashed and cash payments and tax cuts offered to low- and middle-income voters as the Government seeks to regain much-needed momentum before the Federal Election.
Treasurer Josh Frydenberg has seized upon much better-than-expected economic data to reinforce the Government’s jobs success, with unemployment forecast to fall to 3.75 percent within six months.
And with China’s growing influence in the region set to be a key election battleground, the Treasurer also unveiled a massive $9.9 billion package to bolster Australia’s cyber and intelligence capabilities.
Among key measures announced by Mr Frydenberg in his fourth Budget, from midnight on Budget night the fuel excise will be slashed in half for a six-month period delivering an expected cut to petrol of 22c a litre; low- and middle-income earners will receive a one-off payment of $420; and the low- and middle-income offset will increase to $1,500 for individuals from July.
The election eve, retail politics Budget seeks to address Coalition vulnerabilities with the Treasurer unveiling a $333 million women’s healthcare package, along with a $1.3 billion investment to tackle the scourge of domestic violence.
Setting up a Howard-esque election battle over ‘who can be trusted to manage the finances in uncertain times’, the Treasurer declared Australia had bounced back from the biggest economic shock since the 1930s and now leads the world.
“The last two years have been tough for our country, there have been setbacks along the way. But Australia remains resilient. Australians remain strong,” he told a packed House of Representatives chamber.
Despite the pre-election spending blitz, the Government expects to shrink the Budget deficit from $134.2 billion last year to $79.8 billion this financial year, representing a significant improvement from the $99.2 billion deficit forecast in December’s MYEFO.
Such is the current surge in resources export income — should prices remain at record highs for just another six months, the economy will benefit by a further $30 billion.
Economic growth remains strong, with GDP forecast to grow 4.25 percent this year — one of the strongest rates among OECD nations — falling to 3.5 per cent in 2022/23 and 2.5 per cent in 2023/24.
But it is the jobless rate which is the economic standout for the Coalition. Unemployment is forecast to fall to 3.75 per cent by the September quarter — a figure not seen in Australia since the early 1970s.
On a more sobering note, gross debt is predicted to climb to $1.2 trillion by 2026 and increase in later years, with forecasts for continued budget deficits until at least 2033 and no forecast for a surplus.
Struggling households will receive “temporary, targeted and responsible” one-off measures to relieve the weekly budget.
In addition to relief at the bowser, pensioners and welfare recipients will receive a $250 cash bonus to help them put food on the table.
And tax cuts will be focused on low- and middle-income earners through an enhanced tax offset that will see taxpayers earning up to $126,000 a year receive a $1,500 bonus.
Nearly 3 million small businesses have been offered cash flow relief and a reduction in red tape regulation as the Budget seeks to lock-in voter support from Australia’s army of SMEs.
Among the measures for small business, the so-called GDP uplift rate will be slashed from 10 to 2 percent, cutting the amount small business has to remit to the Tax Office each quarter.
And small business owners who hire senior Australians with a disability will receive $10,000 grants as the Government seeks to fill key gaps in the workforce.
Long-standing small business concerns about the Tax Office are being addressed too, with new IT systems to be rolled out that will calculate small business tax instalments based on real-time information.
The Government announced a $6.5 billion package to bolster the number of skilled employees, responding to concerns from business groups over a lack of qualified workers.
Apprentices will receive payments of $5,000 to finish their training, while employers will be offered up to $15,000 to take on and retain young tradies.
An additional 800,000 places will be funded to grow Australia’s skills base while disadvantaged, Indigenous and mature workers will be targeted with additional funding support.
Australia’s regional communities will share in $7.1 billion in Budget measures as the Coalition seeks to ramp up its nation-building credentials.
The Government will spend $2.6 billion in the Northern Territory including new port infrastructure and logistics hubs, while $300 million will be spent to develop LNG and clean hydrogen facilities.
The Hunter region in NSW — where the Coalition is hoping to make electoral inroads — will receive $750 million to help in the transition towards new export industries and away from coal.
Queensland will also receive a large Budget injection to build new dams and boost the inland rail project.
The response from business was fairly positive to Mr Frydenberg’s fourth Budget. Business Council of Australia CEO Jennifer Westacott praised the Budget for taking “immediate pressure off Australians” while laying the groundwork for a more secure economic future. “The dividend of our world beating recovery means the Government can provide temporary cost-of-living relief,” she said.
But the Labor Opposition hit out at the Budget for failing to tackle wages growth, jobs and Medicare. “Nothing in this Budget makes up for a decade of attacks on wages, job security and Medicare. It’s defining features are pay that won’t keep up with prices and almost nothing to show for a trillion dollars in debt,” Shadow Treasurer Dr Jim Chalmers said.
Mr Albanese will outline his alternative Budget plan on Thursday night, with both sides of politics braced for the election to be called.
Steve Lewis, Senior Advisor, SEC Newgate Communications – [email protected]
Claire Bremner, Partner, SEC Newgate Communications – [email protected]
Sara Hourigan, Partner, SEC Newgate Communications – [email protected]
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