On Tuesday the Treasurer released a historic Federal Budget designed to lift the economy out of the doldrums.
A number of job creation and wage subsidy measures in the budget should help rapidly reduce our unemployment rate especially amongst our youngest workers who have been hit hardest during the pandemic.
After coming within a whisker of balancing the budget at the end of 2019, the Treasurer revealed the budget deficit is now projected to blow out to $213.7 billion this financial year, or 11 percent of GDP, the biggest deficit in 75 years. The figures are eye-watering, but the Government is determined to do what it takes to keep Australians in jobs and grow our way out of recession.
While the net debt position of $1 trillion is a bit of a shock, there is no question that the government had to do something fiscally significant to kickstart our economy.
"This is a real restart of the economy. Yes, it will take 10+ years to pay it back, but with the Government borrowing at interest rates less than 1% for 10 years,
if there was ever a time to borrow to not just stimulate the economy,
but create valuable assets, then now is the time.”
Touted as one of the most significant Federal Budgets since the Great Depression, and the first since the economic devastation sparked by the COVID-19 pandemic, Treasurer Josh Frydenberg said the next phase of the journey is to secure Australia’s future.
The 2020 Federal Budget includes hundreds of billions of dollars of economic stimulus measures, the likes of which we’ve never seen before.
Key highlights at a glance Taxes More than 11 million Australians will receive tax cuts with a permanent cut of $47 a week for high-income earners. Middle-income earners will also receive a one-off $21 with extension of the low and middle-income tax offset into 2020-21. From 2020-21, the upper limit of the 19% personal income tax bracket will rise to $45,000 and the 32.5% marginal tax rate upper threshold will lift from $90,000 to $120,000. Jobs The Morrison government will pay businesses up to $200 per week to hire young Australians as part of a $4bn budget measure that aims to reverse an increase in youth unemployment during the recession. The new incentive will target firms that employ young workers who had previously been receiving Jobseeker. It follows Sunday’s announcement of expanded training subsidies, with the government pledging to cover half the wages of 100,000 new apprenticeships and traineeships. Welfare The government has announced two additional economic support payments of $250 to pensioners and other eligible recipients, worth $2.6bn. Extension of the jobkeeper payment support for a further six months until 28 March 2021. Extension of the coronavirus supplement until 31 December 2020 at a rate of $250 per fortnight from 25 September 2020. The budget doesn’t provide any clarity about the future of Jobseeker payment rates after Christmas. Education $1bn will be injected into Australia’s university research sector. Funding for 50,000 online short courses to upskill workers and unemployed Australians in teaching, health, science, information technology and agriculture. $299m to provide an additional 12,000 undergraduate university places in 2021. Small business Businesses with a turnover of less than $5bn – all but the top 1% – will be able to deduct the full cost of capital assets purchased after budget night and first used or installed by 30 June 2022. Small and medium businesses will also be able to apply “full expensing” to second-hand assets; businesses earning $50m to $500m will be able to do so for assets of less than $150,000. Companies with turnover up to $5bn will be able to offset losses against previous profits on which tax has been paid, to generate a refund. Exempting from the 47% fringe benefits tax employer-provided retraining