Federal Budget 2020: David Koch says jobs will help the economy recover

The $213 billion Budget deficit and net government debt of more than $700 billion looks scary but there are two key reasons not to worry, writes David Koch.

• How Australia will climb out of record $1 trillion debt pile
• Calculate how new tax changes will affect you

The federal government is spending roughly an extra $75 billion over the next two years to keep you and your boss happy and positive as we go through the deepest economic recession in living memory.

Yep, this is all about you and your job … because you are the economy. It’s that simple. Unemployment will peak at 8 per cent in December and take another two years to get back under 6 per cent.

That’s what is wreaking havoc with the economy. Jobs really are at the core of a healthy economy … and recovery from this recession.

If you’re in a job, you’re earning an income. Part of that income gets paid to the government in tax and by spending what’s left over keeps businesses open so they can pay tax (from profits) to the government and employ staff who, in turn, earn an income, pay their own tax and spend more.

David ‘Kochie’ Koch gives his Federal Budget analysis. Picture: Hollie Adams

What makes the economy go-round is pretty simple really. You earning an income from your job, spending it with a business so they can create jobs and everyone pays tax.

Yes the $213 billion Budget deficit and net government debt of over $700 billion looks scary but — and I know this may sound weird — don’t worry about it.

While the figures look huge, our economy is also huge by comparison and our debt as a proportion of the economy is much lower than virtually every other advanced economy in the world.

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As a bonus, the government is paying less that one per cent interest on that debt … so it’s cheap money.

So what’s in the Federal Budget to make you feel good and positive?

* The tax cuts due to start in July 2022 will be brought forward two years to start last July. Yes that means you’ve been paying too much tax for the first four months of this financial year but it also means you’ll get a bigger tax refund and there will be less tax taken out of your wage from now on.

For most working Australians that’s an extra $3000-$5000 (depending on your tax bracket) a year extra to go out and spend.

* Aged pensioners will receive a $500 bonus in two equal payments in December and March.

* There are a raft of new job training programs, and billions being spent on infrastructure projects, all designed to create new job opportunities if you’re made redundant.

There will be new job training programs available.

Now to your boss. What’s in this Budget to keep them positive, keep you in a job and create more jobs?

* As we know already, the $101 billion JobKeeper program keeps going until the end of March even though the amount is reduced and eligibility rules have been tightened.

* For businesses not on JobKeeper, they can receive a “hiring credit” of $200 a week if they add an eligible under 30-year-old to their staff and $100 a week for a 30-35 year old new employee.

* If their business makes a loss this financial year they can offset that loss against profits they’ve made in the past two years (usually they can only offset losses against future profits). While they’ve already paid tax on those past profits, they’ll get a refund back once the losses are offset against them.

* Any investment in new assets for the business can be written off against their tax immediately instead of over a few years. Less tax means more money to spend or hire more staff.

The Australian economy was in pretty good shape going into this pandemic. It’s fair to say, if you had to be in any country in the world to get through this recession it would be Australia.

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Originally published as Federal Budget 2020: David Koch says jobs will help the economy recover