Key points
- A boost for manufacturing
- Getting Australians back into work
- Delivering equally for women and men?
- Personal income tax cuts 'fast-tracked'
- JobKeeper to continue, for now
- Migration program future to be revealed
- The big gas plan
- Domestic violence care
It’s been a year like no other and with many Australians still grappling with the economic fallout from the COVID-19 pandemic, the federal budget will soon lay out a plan for the nation’s recovery.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg have described the announcement set to be unveiled this evening as the most significant since World War II.
Economists predict the nation’s cash deficit could reach almost $210 billion as the budget steps up to brace Australia’s economy against the devastation caused by the lockdown restrictions. That is expected to see Australia's national debt ceiling creep to $1.1 trillion.
But behind the headline figures, what might the decisions made in this year’s announcement mean for you?
A boost for manufacturing
Mr Morrison has said the budget will outline a “strong plan” to help all Australians recover from the recession and rebuild the economy from the downturn of the pandemic.
Billions of extra investments in infrastructure, energy affordability, training and skills development, and boosting manufacturing have all been named as key focuses in order to get the economy moving again.
Grattan Institute economist Brendan Coates said the federal government has accepted the need to inject more stimulus into the nation's economic recovery, but just how much more is still an open question.
"Recessions are incredibly costly. If we don’t act we will live to regret it," he told SBS News.
"Our objective here needs to be to get the economy back to potential as fast as we can.
"That reduces the long-term cost [and] the long-term scarring that arises that would otherwise weigh on the shoulders of a generation of younger Australians."
Getting Australians back into work
The government has stressed the focus of its recovery plan is on creating jobs and getting Australians back into work, with its initial focus to drive unemployment comfortably below six per cent.
The official unemployment rate fell from 7.5 per cent in July to 6.8 per cent in August as Australia’s economy began to regain momentum from the impact of coronavirus lockdowns. But the effective unemployment rate remains as high as 9.3 per cent with the recovery slowed by Melbourne’s continued battles with the virus.
Mr Coates said more than a million Australians remain out of work, with young people and women among those worst hit by initial job losses forced by the crisis.
"The first, second and third priorities of this budget have got to be jobs, jobs and jobs," he said.
Women and young people are among those worst hit by job losses in Australia. Source: AAP
“The priority has got to be the kind of projects and the kind of spending, the stimulus that is going to support the economic recovery - particularly on areas of social need that have emerged during the COVID-19 crisis."
There are still around 13 Australians applying for every job vacancy, demonstrating the challenge at hand.
To drive employment growth the government has announced its JobMaker plan as a key part of the COVID-19 recovery which is set to include at least $1.5 billion investment towards boosting manufacturing. It has also committed an additional $1.2 billion to support Australian businesses to employ 100,000 new apprentices or trainees.
That follows a $1 billion investment in a JobTrainer program to provide training places across the country for school leavers, as well as upskilling and retraining job seekers in areas of demand.
It has also committed $800 million towards making work easier to conduct for individuals and businesses in the digital economy.
Delivering equally for women and men?
The government has declared investment in infrastructure and manufacturing will play a key role in the nation’s economic recovery across cities, towns and regional communities.
Named manufacturing priorities include resources technology and minerals processing, food and beverage manufacturing, medical products, clean energy and recycling, defence industry and the space industry. Meanwhile, infrastructure spending is set to focus on transport, water and energy projects.
That includes fast-tracking road and rail projects worth more than $7 billion to get the Australian economy moving again.
But University of Sydney Associate Professor Elizabeth Hill said investment in manufacturing and construction projects must be balanced with funding for “social infrastructure” such as health, education, child and aged care.
She said otherwise there is the danger the budget could exacerbate gender inequalities, with women less likely to benefit from the gains produced from investment in male-dominated fields.
“If you are looking for the biggest employment boost for your fiscal stimulus buck you are going to have to have a strategy that reflects the structure of our economy and structure of our workforce," she said. "We need a response that is fit for purpose, fit for a 2020 crisis, and the economy and labour force."
The government has invested more than $1.6 billion into aged care since the start of the pandemic, with further commitments expected in the federal budget to
Personal income tax cuts 'fast-tracked'
SBS News understands the budget will also likely include the bringing forward of $20 billion in already legislated personal income tax cuts. But Australia Institute economist Matt Grudnoff has argued pumping cash into health, aged care and universities would be a far more effective way to spend the money.
"Stimulus saved is stimulus wasted," he said. "For every one job that the tax cuts could potentially create - about 13,000 jobs - we could get 160,000 - or 12 times as many jobs - investing in employment-intensive industries.
"The reason that tax cuts are such poor stimulus, is because they're saved."
The federal government has also already committed to extending the income support programs of JobKeeper and JobSeeker as part of its coronavirus response.
The federal budget will be handed down on Tuesday evening. Source: AAP
Australian National University demographer Liz Allen said the government must ensure more broadly that investments deliver support to those Australians hardest hit by the economic costs of the recession.
“I hope that we do see a reprioritisation for the better that focuses on what Australia could be … and lasting investment to help make Australia more fair and equal,” she said.
“This is not just a short-term shock, this is a long-term quake that will send shockwaves, not just into our demographic future but for the socio-economic wellbeing of our population.”
JobKeeper to continue, for now
The government's $86 billion JobKeeper program is currently set to continue to deliver support to eligible employees until March next year.
But for full-time workers, the fortnightly payment has been reduced from $1,500 to $1,200, while for part-time workers it has been decreased to $750.
Meanwhile, a coronavirus boost to JobSeeker payments for Australians who are unemployed has been reduced by $300 a fortnight with the supplement set to continue until 1 January next year.
Opposition Leader Anthony Albanese has accused the government of “leaving people behind” by scaling back the amount of the payments, labelling the move "premature". He has also called for the priorities of the budget to include investment in infrastructure, social housing, more skills training, manufacturing and clean energy.
The government is still considering a permanent increase to the JobSeeker rate amid ongoing calls from advocacy groups to remove uncertainty and increase its base rate from $40 a day.
Migration program future to be revealed
of Australia's 2020-21 migration and humanitarian programs are also set to be revealed as part of the October budget process.
The migration system has been rocked by international border closures with the federal government forecasting an 85 per cent drop for 2020-21 compared with the 2018-19 level of 240,000 people.
The hit to population growth is set to have its own impact on the economy, with Deloitte Access Economics predicting there could be 600,000 fewer people in Australia by mid-2022 compared with pre-COVID-19 forecasts.
It's understood the budget's forecast will assume the availability of a COVID-19 vaccine and for borders to re-open early next year in an optimistic outlook for getting migration moving again. But the former deputy secretary of the Department of Immigration Abul Rizvi said the focus of the migration program is likely to shift as the nation grapples with high unemployment and travel restrictions.
Australia's population growth is set to take a hit due to COVID-19. Source: Getty
“If unemployment remains above six per cent, that will naturally drive net migration down,” he said.
“The government’s migration program will be heavily focused towards onshore people. Giving temporary entrants pathways to permanent residency - that will be the focus.”
The big gas plan
There will be $53 million set aside in the budget for the funding of gas infrastructure in Australia.
Mr Morrison has said gas will be the fuel that will help drive down energy prices and emissions as the nation transitions its economy into the future.
This will be underpinned by the government's technology roadmap, which has named hydrogen, energy storage, low carbon steel and aluminium, carbon capture and soil carbon as priority emerging technologies.
But over the gas-led recovery and the viability of the roadmap, questioning whether it is the most effective way for Australia to become a net-zero emissions economy.
Domestic violence care and more
The release of the 2020 federal budget comes after it was postponed in May because of the economic uncertainty caused by the COVID-19 crisis.
Other announcements already made by the federal government include:
- 700 new places for women and children escaping domestic violence under a $60 million “safe places initiative”.
- $10 million in new funding to reduce the number of younger people living in aged care and transition them to age-appropriate accommodation.
- $61.7 million investment in funding conservation of cultural heritage sites, the marine ecosystems of bush-fire impacted coast communities and Great Barrier Reef projects.
- $50 million Regional Tourism Recovery initiative to assist businesses in regions that are heavily reliant on international tourism.
-$100 million for new Regional Recovery Partnerships or projects in areas hit by drought, bushfires and coronavirus.
-$7.6 million towards bereavement payments for parents who lose a child due to stillbirth or when they are under 12 months of age.
- $800 million aimed at helping individuals and businesses working online in the digital economy.
- Universities have also been promised an extra $326 million to provide 12,000 more places for domestic students.
- $3.5 billion to upgrade the National Broadband Network through on-demand fibre-to-the-home connections.
- 10,000 more places offered in First Home Loan Deposit Scheme.
