Federal Budget 2020: Our experts deliver their verdicts
Our experts weigh in on how the budget will affect tax, welfare, aged care, health, education and the economy.
What our experts say:
BUDGET VERDICT
Dennis Shanahan, Political Editor
Scott Morrison’s pandemic recession busting budget and economic recovery plan are built on optimistic forecasts, classic Liberal commitments to private sector investment, a political pinching of Labor’s clothes and an assumption there will be a COVID-19 vaccine generally available next year.
It has also been made possible by historically low interest rates on a day the Reserve Bank kept official rates at just .25 per cent.
In a sea of uncertainty, Josh Frydenberg and Mathias Cormann have decided to make the brave assumption, based on health advice, that there will be a vaccine available to the general Australian population — and elsewhere — by late 2021.
This assumption underpins the 2020-21 budget strategy and drives the optimism of the economic forecasts which outline an almost unbelievable recovery in growth – 4.25 per cent – and jobs – down to 6.5 per cent – by the end of 2022.
Read Dennis Shanahan’s full analysis here.
–
TAX VERDICT
Patrick Commins, Economics Reporter
By keeping the low and middle income tax offset this year, the backdating of the stage 2 tax cuts to July will put more money into the pockets of the families more likely to spend the extra cash when the economy needs it the most.
It’s a smart move for a government that was under the pump from critics who said accelerating the second phase of tax relief would do little to assist the post-COVID recovery.
Read the full story here.
–
WELFARE VERDICT
Rosie Lewis, Political Reporter
The Morrison government has not forgotten older Australians in the middle of the COVID-19 pandemic, producing another John Howard-style separate payment for age pensioners, veterans and self-funded retirees. The $250 cash payments, worth $2.6bn and flowing to more than five million welfare recipients, will be a small but welcome Christmas gift. On the grounds of economic stimulus, the payment should go directly back into the economy because those on low, fixed incomes are more likely to spend any extra money they get. The government has avoided sweeping structural reform of the welfare system and is instead focused on making paid parental leave more accessible to mums during the pandemic and relaxing the requirements for young Australians to receive youth allowance.
Read more from Rosie Lewis here.
–
JOBS VERDICT
Ewin Hannan, Workplace Editor
Josh Frydenberg has promised billions of dollars to encourage employers to take on workers, in a strategy he hopes will see the nation’s unemployment peak at eight per cent at the end of 2020.
If you think this forecast is overly optimistic, you would be right. As treasury notes, with the pandemic still evolving, the range of possible outcomes for unemployment is “substantially wider than normal”.
In other words, treat the jobless rate forecasts in Tuesday’s budget with a high degree of scepticism.
Read more from Ewin Hannan here.
–
AGED CARE VERDICT
Stephen Lunn, Social Affairs Editor
Big ticket aged care reform will have to wait until the 2021 budget.
The government wants to see what the aged care royal commission recommends to reform the system and how much it is likely to cost.
Josh Frydenberg said the government would be ready with “significant additional investment” when the commission reports in February.
The sector, which has already had significant funds thrown at it to stem the disaster of COVID-19 in nursing homes, will have to be satisfied with 23,000 new home care packages, which come at a cost of $1.6 billion.
They will be looking for more, much more, next time around.
Read more from Stephen Lunn here.
–
HEALTH VERDICT
Natasha Robinson, Health Editor
The figure is in: the Commonwealth’s share of total costs to the health system of confronting the COVID-19 pandemic up to 2024 is $4.904 billion. What becomes apparent in reading the budget papers is just how uncertain this figure could turn out to be as the pandemic stretches on.
For COVID-19 vaccines, 1.870 billion has been allocated, with $1.165 billion of this spent in the current financial year and $704m in 2021-22. For the next two years after that, there’s nothing. The obvious question arises: what if a vaccine works for only a limited period of time, and people need periodic boosters? The costs have the potential to snowball.
In every other category of health spending in confronting the COVID-19 crisis, the money dries up after 2022-23. Assuming that hospitals and aged care centres won’t require significant additional funds after the end of next year is an optimistic forecast to say the least.
Funding for telehealth is the other big hole in this year’s health budget. The Federal government is providing $112 million for the continuation of Medicare rebates for virtual consultations, but that takes the funding only up until March next year and there’s nothing allocated or forecast in the budget papers for the extension of Medicare-funded telehealth which has now become an entrenched part of primary care. That won’t please the Australian Medical Association, which is working hard on formulating a permanent plan for telehealth.
Read more from Natasha Robinson here.
–
SECURITY VERDICT
Yoni Bashan, State Political Reporter
Clearly one of the greatest threats to national security is the possibility of a cyber attack, which, according to one scenario, could last for four weeks, cost the economy $30bn, and impact around 163,000 jobs.
In response, the government is rolling out $201.5m for its much-vaunted 2020 Cyber Security Strategy, which will spread cash around various departments to upskill more white-hat hackers, improve critical infrastructure, and bolster existing investigative capabilities.
Elsewhere in law enforcement, the Australian Federal Police will receive $300.2m to maintain its workforce and upgrade its surge capacity. A key funding priority will also be to address the mental wellbeing of its officers.
Additional spending measures will see $55.6m used by the Department of Home Affairs to reopen Christmas Island — it will be used to house high-risk criminals and “unlawful non-citizens” who cannot be deported because of the COVID-19 pandemic.
The country’s spy agency, ASIO, will take a slight haircut this year, receiving $7.8m less than it did in 2019-2020. According to the budget papers this is a “result of progressing a modest reform program rather than Transformation due to the uncertain COVID-19 economic environment”.
Read more from Yoni Bashan here.
–
BUSINESS VERDICT
John Durie, Senior Business Columnist
All hopes rest with small business leading the jobs recovery with the government throwing a wishlist of tax concessions to smaller companies, leaving big business to wait for the next leg of reform if the government’s heroic economic assumptions come home.
The government has revived the short lived Gillard government loss carry back which allows loss-making companies to claim deductions for past years’ taxes and full tax expensing for new investment, which is the most potent weapon costing $26.7 billion.
Small business accounts for 40 per cent of all private sector jobs but just three per cent of employment increases since 2015 which underlines the risk in throwing all the eggs into one sector.
If the economy does bounce back strongly next calendar as promised business of all kinds will be smiling and the stage will be set for actual structural reform rather than the tax concessions rightly awarded this time around.
Read more from John Durie here.
–
DEFENCE VERDICT
Ben Packham, Foreign Affairs and Defence Correspondent
This is a no surprises budget for Defence. It cements funding over the next four years towards the government’s $270bn, 10-year plan to re-arm the Australian Defence Force so it can deter strategic rivals (ie. China). The rise in defence funding to almost 2.4 per cent within four years reflects the high priority of the task.
Read more from Ben Packham here.
–
HOUSING VERDICT
Richard Ferguson, Political Reporter
Josh Frydenberg’s $1bn offer to boost affordable housing and get more Indignous Australians owning a home is a political blow to Labor’s plans to campaign on social housing. The expansion of bonds for community housing providers could help thousands of Australians get a roof over their head through the recovery, and could push Anthony Albanese to promise even more money for his own plans. But it’s yet to be seen if the Treasurer’s optimistic prediction of a 7 per cent rebound in dwelling investment in 2021 on the back of his policies will come true.
Read more from Richard Ferguson here.
–
STATES VERDICT
John Ferguson, Associate Editor
When Josh Frydenberg walked into the House of Representatives in Canberra last night his chief problem was seven hours’ drive down the Hume.
The budget underpins the extent of the damage caused by the hotel quarantine debacle in Victoria.
It’s Frydenberg’s problem to inherit and an undeniable handbrake on the national economy, wiping 2 per cent off GDP growth in the September quarter.
The number is terrible and one that Daniel Andrews cannot escape.
Victoria sneezed and now the rest of the country has an economic virus.
Frydenberg and the Prime Minister have been building up to this point for weeks, subtlety (mostly) pointing out that the economic headwinds have been unnecessarily strong because of Victoria’s second wave.
This positioning has been quite deliberate as Treasury has reported a collapse in the national economy and arguably the worst business conditions in a century.
Read more from John Ferguson here.
–
INFRASTRUCTURE VERDICT
Rosie Lewis, Political Reporter
During a year in which one million Australians lost their jobs or had their hours reduced to zero because of the COVID-19 pandemic, the Morrison government has chosen the quickest option for boosting employment and getting boots on the ground – building road, rail and bridge projects. The $10bn in new infrastructure funding announced in Tuesday’s budget is dominated by road safety improvements and upgrades to the nation’s road and rail networks. Labor wants the government to think bigger with social housing in the mix. The test now is to make sure hundreds of millions of dollars start flowing to the states within weeks so that projects begin in earnest and the economy is stimulated.
–