BUDGET 2021

Budget 2021: 'Australia is coming back' in big spend budget: Frydenberg

Treasurer Josh Frydenberg visits the press gallery before delivering his third budget on Tuesday. Picture: Sitthixay Ditthavong
Treasurer Josh Frydenberg visits the press gallery before delivering his third budget on Tuesday. Picture: Sitthixay Ditthavong

The Federal Treasurer has unveiled a multi-billion dollar pandemic stimulus plan with targeted spending and low to middle income tax cuts for more than 10 million Australians in a budget which aims to secure long term economic recovery and put the Morrison government on an election war footing.

A five-year $18 billion dollar aged care package was unveiled on Tuesday evening as the budget centrepiece, as well as spending measures targeting childcare, preschool, women, mental health, infrastructure and an additional $1.9 billion lifeline for the beleaguered COVID-19 vaccine roll-out.

With this funding boost, the federal budget contains a revised Treasury assumption that an Australia-wide two-dose vaccination program will be "in place" by the end of the year and that the international border will gradually open mid-2022.

"Australia is coming back", Josh Frydenberg told Parliament. "In the face of a once-in-a-century pandemic, the Australian spirit has shone through."

"Doctors and nurses on the front line. Teachers and students in the virtual classroom. Businesses, big and small, keeping the economy moving."

And in a nod to former prime minister Tony Abbott, he described Australia's efforts in fighting the pandemic as "Team Australia at its best. A nation to be proud of."

But, he said, with the pandemic not over and still raging around the world; "For as long as the virus persists, so will we."

The budget deficit will reach $161 billion in the next year down $36.7 billion from the $197.7 billion forecast in December and down $52.7 billion on the record $213.7 billion deficit six months ago in the October budget.

While it is an improved position, it is still an extraordinary figure for a government that came to power in 2013 campaigning against debt and deficit.

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Despite the budget position and walking away from a focus on debt and deficit, Mr Frydenberg insists this is a Coalition budget with Liberal values.

"Reward for effort. The power of aspiration and enterprise. Upholding personal responsibility," he said. "And always providing a helping hand to those who need it. This is what the Coalition stands for."

Treasury estimates that the budget will support the creation of more than 250,000 more jobs by the end of 2022-23. The Treasurer says he is confident this can be achieved. He wants unemployment down to pre-pandemic levels.

Unemployment, which currently sits at a rate of 5.6 per cent seasonally adjusted is forecast to fall to below five per cent by late 2022 and reach 4.75 per cent by June 2023.

Overall, public service employment is expected to grow as the government pours more money into service.

But there is no sign of the Coalition scrapping its staffing cap.

The buoyant economy - particularly the stronger than expected employment position - has improved the budget picture for revenue. Income tax receipts have risen by $84.5 billion since last year's October budget.

Booming iron prices - which have recently passed $USD200 per tonne and to date been largely unaffected Australia's trade dispute with China unlike other commodities - have also helped the bottom line.

However, Treasury has assumed the iron ore spot price will to decline to $USD55 per tonne by the end of the next March quarter.

More than 10 million low- and middle-income earners will get an additional tax cut to the one announced in the first pandemic budget in October.

They will receive up to $1080 for individuals or $2160 for couples.

"More of their money in their pockets to spend across the economy, creating jobs," Mr Frydenberg said.

As foreshadowed as a response to the damning report from the Royal Commission into Aged Care, the strained aged care sector will get $17.7 billion over five years including funding for another 80,000 new home care packages and 33,000 new training places for personal carers.

It is a record injection for the aged care sector, but it falls short of what has been demanded by reform advocates

"We are committed to restoring trust in the system and allowing Australians to age with dignity and respect," Mr Frydenberg said.

Describing mental health as a "clear national priority" and "beyond politics", $2.3 billion is being earmarked for mental health care and suicide prevention. Among the measures, the youth Headspace centre model of mental health support will be expanded to people aged over 25.

The much awaited women's package sees a 50-page budget statement on women and $1.1 billion being spent on women's safety. This includes measures designed to keep women safe from domestic violence and address sexual harassment in the workplace. The government is promising more legal assistance, counselling, financial support and access to emergency accommodation.

The government is also moving to address gender inequities in superannuation savings, by removing the current $450 per month minimum income threshold for the superannuation guarantee.

It estimates this measure will improve economic security in retirement for around 200,000 women.

Everything depends on the Covid response.

In an acknowledgement that the nation-wide vaccine rollout has been a debacle and needs a rescue, a further $1.9 billion has been allocated for the roll out of vaccines.

There is also $1.5 billion for Covid-related health services, including for testing and tracing, respiratory clinics and telehealth.

There is no specific money allocated to support a national quarantine hub. The Treasurer says the Victorian proposal for such a centre north of Melbourne is still being assessed.

The budget assumes localised outbreaks of COVID-19 in Australia for the rest of the year, but they will be largely contained.

By the start of 2022, the Treasury assumption is that the vaccine roll-out is "in place." That is not a statement of completion. With around 2.7 million doses administered so far, there is still a long way to go to get Australia there.

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This story 'Australia is coming back' in big spend budget: Frydenberg first appeared on The Canberra Times.

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