“This is a heavy burden, but a necessary one to responsibly deal with the greatest challenge of our time,” Frydenberg said, while also noting that Australia’s was more fortunate than other economies.
Current figures show that Australia’s net debt will peak at half of that currently expected for the UK and around a third of that expected for the United States.
To alleviate this, Frydenberg announced that the government would target the twin economic drivers of job creation and economic growth via a series of measures that centre on tax cuts, government stimulus for the manufacturing sector, regional Australia, and small and medium-sized business.
A chief focus will be younger Australians who are currently facing employment challenges not seen since the Great Depression.
JobMaker: The Next Generation
Understanding that the younger generation is facing an upward economic battle the federal government announced in the budget a new JobMaker hiring credit to encourage businesses to employ younger Australians which they believe will support about 450,000 jobs.“Having a job means more than earning an income. It means economic security. It means independence. It means opportunity. We can’t let this COVID recession take that away,” said Frydenberg.
The hiring credit will be payable for up to twelve months and available immediately to employers who hire those who are currently on JobSeeker between 16-35 years of age.
All businesses apart from the major banks will be eligible for the credit which will be paid at the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35.
Tax Cuts
Focusing on tax cuts, the Morrison government hopes that keeping its election promise of putting more cash into people pockets will generate billions of dollars worth of economic activity and an estimated 50,000 jobs.To this end, Frydenberg said that 11 million Australians would receive a tax break after Stage Two legislated tax cuts were brought forward.
Stimulus For Businesses and Manufacturing
Frydenberg also targeted stimulus for businesses with turnovers of less than $5 billion, allowing them to write off any assets purchased from now until June 2022. Small and medium businesses will also be able to offset any losses made between now and June 2022 against profits made in the 2018-2019 financial year.Response to the Budget
Responses to the budget have been varied. Deloitte, in its overall analysis, noted that while the budget is $29 billion worse than forecast in the July 2020 Economic and Fiscal Update, the fact that the debt costs only $17.3 billion in interest payments in 2022-23—less than the $19 billion paid in 2018-19—was an important takeaway.“The defence of our lives and livelihoods is much cheaper than most realise,” said Deloitte, adding that Treasury has noted there will be a rapid recovery once a vaccine is fully in place in Australia.
But the Centre For Independent Studies argued on Wednesday that the Budget was“ too focused on the short-term, too heavy on spending and too light on permanent structural reform.”