Federal budget 2022: Labor reveals true danger of where economy is headed says Ross Greenwood

There is a very clear message in the budget, stay at home and keep your job as the economy takes a dive. Ross Greenwood explains.

Opinion

If Covid kept us at home for more than two years, the forecasts in Jim Chalmers’ budget are likely to keep most people here for the foreseeable future.

The message from this budget for every Australian family is: stay at home; keep your job … and keep your job.

The forecast increase in unemployment – from 3.5 per cent now to 4.5 per cent in two years’ time – means 140,000 Australians who currently have a job … will be out of work.

The irony is that one of the key spending planks in the Budget – $1 billion to provide free TAFE courses to Australians – might prove to be poorly timed. Given that most apprenticeships are for three or four years – many qualified Australians will walk out of their free training straight into a much tougher employment market.

The forecasts in Jim Chalmers’ budget are likely to keep most people here for the foreseeable future. Picture: Getty

For this Budget shows the true danger for the economy is in two years’ time.

It paints a picture of what happens if the global economy falls into a deeper recession. A hard-landing if you like. The forecast still shows a softer landing for Australia – no recession – but it might be a close-run thing. Which is why holding onto your job is so vital.

But the Budget also shows the serious impact that rising mortgage rates and electricity prices will have on your family budget. They are quickly gobbling up the savings that Australians accumulated during the Covid lockdowns.

Family savings … the Budget says … will deteriorate from just under 10 per cent now to around 4 per cent in two years’ time. In other words, an increasing number of Australians will end up spending more than they are saving … to simply survive.

And that evaporation of savings – along with the forecast Australian dollar remaining stubbornly low around 65US cents – means overseas travel, especially to America – will be simply too expensive for many Australians.

Which is why the subsidised child care – at a cost of $4.7 billion over the next four years – will be a saviour for many families.

By increasing the Child Care Subsidy from 85 to 90 per cent … it means more families will decide to gain a second income.

That will inevitably happen as electricity prices and mortgage payments soar. But it means for some families, that move will tip the economic balance about whether an extra income is needed in the family to cope with the rising costs.

And as for those rising electricity prices – up to 50 per cent next year – there is no relief in sight, not in the short term at least.

Though the Government is committing $20 billion to invest in electricity transmission – to transport future renewable electricity – that is off into the future. It is the way the Government will seek to drive down prices … but somebody – most likely you and me – will have to pay for that investment.

Sky News business editor Ross Greenwood says Labor’s budget should have been tagged: Stay at home … keep your job …

So, the message is … don’t expect cheaper electricity any time soon … the plan is further out that your immediate needs.

Building a Better future … the Treasurer’s budget is tagged. It should have been tagged, stay at home … keep your job … because the message is that things, for many, will get tougher.

Ross Greenwood is Sky News Business Editor. Watch Business Now, Monday to Friday at 4.30pm AEDT on Sky News. Watch on Foxtel and Sky News Regionals or stream on Flash.

Originally published as Federal budget 2022: Labor reveals true danger of where economy is headed says Ross Greenwood