Treasurer Josh Frydenberg says government support to persist until unemployment falls
The devastating effects of the coronavirus pandemic have been laid bare as the Treasurer hands down a Budget designed to pull Australia back into shape.
Treasurer Josh Frydenberg has vowed to flood the economy with tax cuts, wage subsidies and business incentives in an effort to rebuild the nation’s crippled economy.
In what the Treasurer had hoped to be his “back in black” budget surplus speech, Mr Frydenberg instead announced an eye-watering $213.7 billion deficit and $703 billion debt, with the full effects of the devastating coronavirus pandemic finally laid bare.
“This is a heavy burden, but a necessary one to responsibly deal with the greatest challenge of our time,” he said.
Speaking to parliament on Tuesday night, the Treasurer announced billions of dollars in wage subsidies and stimulus to help the country’s recovery.
“Our economic and fiscal strategy sets out the path to grow the economy, stabilise debt and then reduce it over time,” he said.
The Treasurer said the Government’s budget position would focus on spending to support confidence and jobs until the unemployment rate fell below 6 per cent.
“Once the recovery has taken hold and the unemployment rate is on a clear path back to pre-crisis levels, comfortably below 6 per cent, we will move to the second phase where there is a deliberate shift from providing temporary and targeted support to stabilising gross and net debt as a share of the economy,” he said.
“We will then rebuild our fiscal buffers, so that we can be prepared for the next economic shock.”
Australia’s $703 billion in net debt represents 36 per cent of the country’s gross domestic product (GDP). Debt is expected to peak at $966 billion in 2023-24, a massive 44 per cent of GDP.
The deficit is forecast to fall to $66.9 billion by 2023-24.
“The global economic environment remains uncertain, with the impact of this crisis to be felt for many years to come,” Mr Frydenberg said.
“There is no economic recovery without a jobs recovery. There is no budget recovery without a jobs recovery.”
Mr Frydenberg said every facet of the economy would need support to endure the downturn, with billions pledged for infrastructure upgrades and upskilling workers.
Among the new measures announced on Tuesday night is a hiring credit scheme, which will encourage businesses to hire younger Australians.
The scheme will provide businesses $200 per week for up to 12 months to hire a new employee under the age of 30. A weekly subsidy of $100 will be provided to businesses that hire a worker aged between 30 and 35.
Treasury forecasts it will support about 450,000 jobs for young people.
Mr Frydenberg said the economic downturn sparked by the COVID-19 pandemic had disproportionately affected female workers, prompting $240 million in funding to get women back into jobs.
The Treasurer has also brought forward planned tax cuts, which will save nearly 7 million Australians about $2000 a year.
“Tax cuts will put more money into the pockets of 11 million hardworking Australians and their families,” he said.
Incentives for businesses to spend will also be increased, with 99 per cent of businesses able to fully write off eligible assets for tax purposes.
“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a food manufacturing business will be able to expand its production line,” Mr Frydenberg said.
“Every sector of our economy, every corner of our country, will benefit.”
The Treasurer said the Budget measures would help Australia “come back”.
Australia’s circumstances have changed dramatically. But Australians have not,” he said.
“We are hardworking, resilient, resourceful, and compassionate people. Across this country, people are digging deep, banding together, and getting on with it.
“The road to recovery will be hard — but there is hope.
“The Morrison Government’s message to Australians is that we have your back.”
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