New Zealanders who want a preview of Finance Minister Grant Robertson’s budget next week need only take a quick read of the latest Australian budget presented in Canberra last night.
The Liberal-National coalition is promising a huge spend-up, with the Federal Treasurer, Josh Frydenberg, being immediately accused of delivering a “Labor-lite” document.
As in NZ, Australia’s is a deficit-laden budget as the leadership strives to sustain a recovery from a coronavirus-induced recession.
Setting the scene, the Federal government reminds the voters:
“This a deadly pandemic and we are still in the midst of it. We are doing what is needed to keep the economy on track”.
Australia’s deficit will hit a record $A161 billion in the fiscal year ending 30 June 2021 though, as a strong economic rebound improves government finances, that is more than $A50 billion lower than a forecast made in December.
The government has pledged close to $A3.5 billion in Covid-related measures including vaccine procurement and funding for contact tracing and testing facilities.
Here’s a Frydenberg phrase that is almost certain to find an echo in NZ next week
“The economy is coming back. Australia is coming back”.
The quicker-than-expected pick-up in activity means the government is pulling in more tax receipts and making less welfare payments than had been previously forecast. It is also enjoying a resurgence in the terms of trade.
The jobless rate is forecast to fall below 5% as early as next year, representing a remarkable turnaround from 2020, when measures to contain Covid-19 shut down swathes of the economy.
Among the budget measures is an extension of a tax rebate for more than 10 million low- and middle-income earners.
The budget is also pledged to increase childcare subsidies through a A$1.7 billion investment. The spending targets families with more than one child in daycare, giving more parents, especially women, the choice to take on extra work.
The Morrison government released a separate “Women’s Budget Statement” including measures designed to support women leaving violent relationships. More than $1.1bn is allocated to women’s safety services.
An extra $2.3bn is set aside for mental health.
Frydenberg unveiled $A589 billion in spending measures for the fiscal year ending June 2022.
Budget papers showed the deficit is forecast to remain close to $A100 billion in the next two fiscal years. Large deficits are forecast every year until June 2025, the limit of the budget papers’ projections, with the debt load rising during that time to reach almost A$1 trillion.
Federal PM Scott Morrison the morning after crowns it all:
“We have done extraordinarily well. Now we are in the recovery phase”.
With the unspoken: “Re-elect us for more of the same”.