Australia Promises, promises. Josh Frydenberg made a lot in last year’s budget, but did they stack up?
Decade of budget deficits ahead as government spends billions to recover pandemic-hit economy
The Treasurer has declared Australia's economic engine is "roaring back to life" as he unveiled tens of billions in new spending in a budget that could be the Coalition's last before a federal election. The government is pitching its second pandemic budget as solely focused on Australia's recovery from the COVID-19 pandemic and recession.That will see a decade of deficits and debt that's set to peak at almost $1 trillion in 2025.In its bid to drive jobs growth, the government is targeting areas where there are skills shortages, like child and aged care."The economy is coming back.
It seems like only yesterday Treasurer Josh Frydenberg was unveiling the budget he promised would drive Australia out of pandemic doldrums. Abandoning the deficit-fetishism that has plagued politics for decades, he promised big-spending measures. And if the recent drops are anything to go by, he’ll promise more of the same on Tuesday.
But seven months later, many of— wage subsidies and women’s economic security — have failed to have a big impact. And it’s unlikely many of the big assumptions underpinning that budget’s optimistic projections will play out.
Big spending likely from improved budget
Treasurer Josh Frydenberg is expected to fuel Australia's economic recovery with further big spending from an improved budget on May 11.Josh Frydenberg recently scolded a senior journalist for mentioning the election in the context of the budget, calling it "cynical".
The JobMaker fail
The JobMaker hiring credit was pretty much the lead item in Frydenberg’s last budget speech. The $4 billion scheme was meant to use wage incentives of up to $200 a week to hire additional workers aged 16 to 35. Importantly, it was supposed to smooth the winding up of JobKeeper in March, which could cost up to 150,000 jobs.
Right from the start there were concerns about JobMaker incentivising employers toand replace them with younger, subsidised ones. Treasury’s revealed employers could use the scheme to sack one full-time worker and put on three part-time workers.
By the time JobKeeper wound up,. The government said the under-use of the scheme was Labor’s fault for talking it down.
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The federal budget will have measures for retirees, single parents, and first home buyers. What about you?Pre-budget leaks are a well-established tradition, and this year has been no exception.
Video: Budget needs to see 'greater investment in older Australians' (Sky News Australia)
What women’s budget?
Another big item was a women’s economic security statement, intended to grapple with the gendered effects of the COVID-19 recession. But numerous media outlets listed “women” as budget losers in their coverage because the $240 million package was largely concerned with boosting female representation in STEM, and had little to help those who’d lost work during the pandemic. And there was nothing for older women.
Since then, the government has come under fire for its perceived tone-deafness on gender-related issues. No wonder the drops about billions being spent to fixare already in the media.
Regions were big winners
The regions were big winners. But there have been a few cracks in some of the measures. The Building Better Regions Fund was extended in October. This month reports revealed Deputy Prime Minister Michael McCormack and a “secret” group of ministers had beenbefore the last election.
War on proxy advisers: is Frydenberg seeking revenge over JobKeeper embarrassment?
The timing of Treasurer Josh Frydenberg's proxy proposal seems designed to cast doubt on his nemesis Ownership Matters.What next — the Morrison government legislating that media outlets be forced by the government to give advance copies of their stories about politicians to registered political parties?
Meanwhile, the government’s asset tax write-off has led to a boost in investment in farm equipment, but agricultural accountants have warned about the, where purchasers might be whacked with extra taxes on the purchases years down the track.
Do the assumptions stand?
Overall, Frydenberg struck an optimistic tone while unveiling his last budget. The message was Australia had handled the pandemic successfully and our recovery was on track to look pretty V-shaped. And while the economy is stronger than many anticipated a year ago, its ongoing health was underpinned by some.
First, the 2020-21 budget assumed a vaccination program would be “fully in place” by late 2021. But with the rollout being bungled by the government and concerns about AstraZeneca’s side effects, timelines are effectively out the window and many Australians won’t be fully vaccinated until next year.
Another assumption was that international students, migrants and tourists would gradually start returning in the latter half of 2021, with pilot programs to bring in small cohorts of students getting under way late last year. But international students haveabout their return, pilot programs have failed to take off, and despite the New Zealand bubble, international travel might not be guaranteed even after Australia is fully vaccinated.
Still, not every assumption is working against the treasurer. The budget’s GDP forecasts assumed the iron ore price would fall to US$55 a tonne by the end of June. Right now it’s booming at US$193 a tonne, a boost that could
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What is the federal budget, and why you should care .
If you don't know your forward estimates from your fiscal outlook, here's a guide to what a federal budget is and why it matters to you.Treasurer Josh Frydenberg will deliver the federal budget at 7:30pm AEST on Tuesday, May 11.