Last Tuesday the Australian Treasurer, Josh Frydenberg, delivered the Australian Government’s Budget for 2021-2022.
It was only 7 months since our last budget, but we are back to the usual program of the second Australian Parliamentary sitting week in May.
Many commentators see the budget focused on Middle Australia and expect that the Morrison government will call an early election probably for the 9th October, 2021.
Politically, the economically conservative liberal National party coalition have seized the middle ground leaving the Australian Labor Party with little room to move.
Some Key Points:
- Something for all – it is a pre-election budget
- Business $20.7bn
- Skills & Training $2.7bn
- Middle Australians – $7.8bn in Tax cuts
- Women & Children $3.4 bn
- Disability Sector extra $13.4 bn
- Aged care extra $17.7 bn
- Migration numbers as per 2020-21 budget 160,000 – ceiling not targets.
- Foreign student can now work 40 hours a week and in tourism, hospitality and agriculture more.
- Recognition that the economy is still suffering from Covid-19.
- Broad big spending – infrastructure spending will kick-in.
- Bio and Medtech’s only to pay 17% tax on patent income.
- Energy policy to get government investment in gas fired plants, tax concessions and technology investment grants.
- Defence spending on capital items continues to grow.
- Jobs are to be created via infrastructure delivery and the funding of 170,000 additional apprenticeship over 4 years.
- The Government will invest in green energy – hydrogen, storage and gas.
First some scene setting- the Australian economy is having a mixed experience on the basis of the lack of international travel and commerce associated with Covid 19.
International trade flows have been changed and this has been good and bad for Australia.
Iron ore is currently trading at US Dollars 230 a ton the coking coal is around UD Dollars 100 per ton.
Australia’s third-largest industry is international education and, like international tourism, has been very badly hurt by the closed doors of Australia, which were instituted to protect the population from the spread of Covid 19.
The Australian government is continuing its Keynesian response and trying to spend its way to maintain high employment. Today global interest rates are low but compared to the rest the world our economy is doing well.
I think there is a clear message to foreign students here and those who have the capacity is that Australia is welcoming business and investor migrants, as they are part of the growth story and will create the smart jobs of the future.
The second message, “fortress Australia”, cannot be a long-term policy so we must plan to open the doors and live with Covid-19 like we live with the flu.
This type of budgets cannot continue for the next decade but it is what is required now.
Eventually Australia will re-open and recover. There will be a national election and our democracy will continue.
This is the right budget for these times.
