The big picture highlights of 2020–21 Budget
On Tuesday 6 October, the Treasurer, The Hon Josh Frydenberg MP, delivered the delayed 2020–21 Federal Budget, his second Budget.
A big spending Budget that is all about jobs
How times change. In April last year, Mr Frydenberg delivered a Budget that was forecast to produce a surplus. Now, thanks largely to the economic shocks resulting from the COVID-19 pandemic, the Government is faced with record deficits and high unemployment.
The Government’s response is a Budget that is “all about jobs”, “helping those who are out of a job get into a job” and “helping those that are in work, stay in work”. Mr Frydenberg said “there is no economic recovery without a jobs recovery” and “no budget recovery without a jobs recovery”.
To that end, the government is spending a lot of money – both directly and indirectly (bringing forward the 2022–23 tax cuts and providing incentives for business to hire and invest). The Government’s overall “response and recovery support” is $507 billion, including $257 billion in direct economic support.
But it may not end there. As Treasury points out, there remains substantial uncertainty around the global and domestic outlook, including around the spread of the coronavirus, future outbreaks, as well as timing and efficacy of vaccines and other medical treatments. Only time will tell if the measures in this Budget are sufficient and/or well targeted.
Big picture overview
The big picture highlights of this year’s Budget:
Deficit: $213.7 billion (or 11% of GDP) in 2020–21, falling to $66.9 billion (3.0% of GDP) in 2023–24 and $49.5 billion (1.6% of GDP) by the end of the medium term
Net debt: $703 billion (or 36.1% of GDP) for 2020–21, rising to $966 billion (or 43.8% of GDP) by the end of the June 2024 quarter. Net debt is then projected to fall to 39.6% of GDP at the end of the medium term
Economic growth: The economy is forecast to fall by 3.75% this calendar year, but to grow by 4.25% in 2021
Unemployment: Unemployment is to peak at 8% in the December 2020 quarter and to fall to 6.5% by the June 2022 quarter
Total tax receipts: $424.6 billion ($364.7 billion excluding GST) for 2020–21 – revised down by $55.2 billion compared with the 2019–20 MYEFO but revised up by $8.7 billion since the July 2020 Economic and Fiscal Update (driven by stronger-than-expected labour market outcomes, higher commodity prices, and a shallower-than-expected deterioration in asset prices).
Health (COVID-19): Over $750 million to support the continuation of COVID-19 testing, $170.8 million for the continued operation of up to 150 dedicated respiratory clinics to manage and diagnose COVID-19 cases; $1.1 billion to States and Territories through a funding agreement on COVID-19 Response (in addition to the $3.7 billion already provided); $111.6 million to support the continuation of temporary MBS telehealth services for GP consultations, mental health, allied health and specialist services
COVID-19 vaccine: $1.7 billion over two years from 2020–21 to secure access to over 84.8 million doses of potential vaccine candidates developed by the University of Oxford and the University of Queensland; $123.2 million to join the international COVAX facility; $24.7 million to purchase vaccine needles, syringes and sharps disposal containers
Mental health: $100.8 million over two years from 2020–21 to ensure people with a mental health care plan can access up to 10 additional Medicare-subsidised individual psychological therapy sessions
Aged care: $245 million to support aged care providers to meet additional costs associated with COVID-19; $205.1 million for the Workforce Retention Bonus Payments for aged care workers; $103.4 million to extend the Aged Care COVID-19 preparedness measure
Child care: A Victorian recovery payment equivalent to 25% of pre-COVID revenue through to 31 January 2021 – conditional on maintaining a fee freeze at pre-COVID-19 levels and child care services maintaining the Employee Guarantee protections for relevant employees
Health insurance: Increasing the maximum age of dependents allowed under private health insurance policies from 24 to 31 years and removing the age limit for dependents with a disability
Housing: Extending the First Home Loan Deposit Scheme by a further 10,000 places; enabling the National Housing Finance and Investment Corporation to issue an additional $1 billion worth of bonds to attract investment to increase the supply of affordable housing
Higher education: $1 billion in new research funding to the university sector in 2020–21; $251.8 million over two years to support the delivery of 50,000 online short courses online in areas such as teaching, health, science, information technology and agriculture; $298.5 million over four years to provide an additional 12,000 undergraduate Commonwealth Supported Places in 2021 prioritised according to labour market need, skills gaps, industry engagement and expected student demand
Jobseekers: $295.9 million to deliver a new Digital Employment Services platform that will assist job seekers in managing their own way into employment and training; $183.1 million to provide responsive and individualised support to online job seekers, including through a Digital Services Contact Centre; $62.8 million to establish a new Local Jobs Program to connect job seekers to local employment opportunities
Infrastructure (general): $14 billion over the forward estimates period for new and accelerated projects since the onset of the COVID-19 pandemic; a new $2 billion Road Safety Program; an additional $1 billion of funding for the Local Roads and Community Infrastructure Program
Infrastructure (specific projects): $603 million for the New England Highway Singleton Bypass and Bolivia Hill Upgrade (NSW); an additional $491 million for the Coffs Harbour Bypass (NSW); $528 million for upgrades to the Shepparton and Warrnambool rail lines (Vic); $750 million for Stage 1 of the Coomera Connector (Qld); $227 million for METRONET – High Capacity Signalling and Morley Ellenbrook Line and $87.5 million for Reid Highway Interchanges – West Swan Road (WA); $200 million for the Hahndorf Township Improvements and Access Upgrade and $136 million to progress the Main South Road Duplication Stage 2 (SA); $65 million for the Tasman Bridge Upgrade (Tas)
Manufacturing: $1.3 billion for the Modern Manufacturing Initiative; $107.2 million for the Supply Chain Resilience Initiative
Regional Australia: $550 million for a package of measures to support regional Australia recover from the impacts of COVID-19, including $250 million for a Regional Tourism Recovery Package
Online: accelerated adoption of digital technologies to increase productivity and jobs growth and bring Australia closer to its goal of being a leading digital economy by 2030
Agriculture: $328.4 million over four years to bust congestion in the regulation of farm exports, making it easier for farmers to get their goods to market and helping rural Australia to recover from drought and COVID-19
Trade: $28.6 million to support initiatives to modernise Australia’s trade system and streamline border services
Fighting crime: $15.1 million to the ATO to target serious and organised crime in the tax and superannuation systems.
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