/ 10 May 2021

Federal Budget one sleep away

And sure, the Federal Budget gets your heart racing each and every May, but this year is set to be one for the ages thanks to the once-in-a-lifetime (we hope…) pandemic.

BUT ISN’T THE ECONOMY GOING BETTER THAN EXPECTED?
It is. A year ago, Australia was expecting a ‘U’ shaped recovery, but we’ve gone for a ‘V’. What that means is instead of lingering in the economic yuckiness at the bottom, we took a dive and then kicked back up. We’ve seen that with unemployment – now at 5.6% despite predictions of 10% and then some. The government now has ambitions to get it to under 5% – seriously low, even in pre-pandemic times. Yesterday, Treasurer Josh Frydenberg said it’s a realistic aim after 105,000 people came off income support last month despite the $90 billion JobKeeper wage subsidy program at the end of March. That’s good news, but there’s “a lot of work still to do,” he said.

LIKE WHAT?
Well, the pandemic has put Australia in serious debt. It is forecast to pass $1 trillion, which is a big hole to fill… But this year’s deficit is expected to be around $150-160 billion, about 25% better than the Treasury expected when it released the last forecast in December. That’s given the Morrison Government room to spend on job creation programs as a rev up for the economy. And we can expect billions for long-term “structural spends” to fix failing services across the aged care, disability and mental health sectors. This morning, there’s word of $10 billion for road, rail and freight infrastructure projects. Labor’s Treasury spokesman Jim Chalmers yesterday said Oz would be “recovering more strongly were it not for the vaccines debacle and other mistakes that the government has made”. We’ll find out the deets tomorrow night – squeal…

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