Tuesday night’s budget was welcomed by business, and rightly so. The measures it contained were about growing our way out of an economic downturn as opposed to propping us up with continuing welfare.
Instead, the budget backs businesses to make savvy decisions about how to spend and invest, in order to grow, contribute to our recovery, and most importantly, employ people.
Back in July we suggested to the Prime Minister that he commit to restoring a six percent unemployment rate, as part of several proposals for supporting business survival. You may ask why, as the unemployment rate is not controlled by government, but rather reflects the complicated set of economic and social circumstances that see one person holding down a job where another doesn’t.
But the underlying message was received, and the government has now committed to continuing support measures until unemployment drops to six percent; the pre-COVID national rate. This is another means of building confidence in the community, which we believe will see people continue to earn, spend and support business.
The budget predicts that unemployment will peak at eight percent by the end of this year, and arrive back down at our desired six percent in the 2022-23 financial year. That’s a quick turnaround, and it’s not even the most surprising assumption contained in the budget.
The show-stopper is that a vaccine will be discovered and available to treat all Australians by the end of next year. Let’s hope that’s a conservative gambit because our local hospitality and events sector cannot fully rebound until social distancing is lifted.
Then, despite the ongoing squabbling and grandstanding occurring between states over border closures, the budget assumes they will be open by Christmas. Surely there’s a big question mark over this one.
Larger implications will arise from Treasury’s forecast that international travel will remain at a trickle for most of next year. Not only is this bad news for the tourism sector, but as a University region its very concerning that international students will be prevented from returning – despite talk of pilot programs and the like.
This will impact every part of our economy as migration, which provides us with a ready workforce among many other benefits, has dropped off a cliff and is not expected to return to normal levels for several years. We haven’t seen population growth this low since 1946, which will decrease demand for products and services and make it harder for businesses to find staff.
In light of this doom and gloom, perhaps we should be asking whether the budget has done enough. This week we turned to Professor Alex Frino of the University of Wollongong and David Apolo of KPMG to walk us through it in a webinar.
Professor Frino forecast that the Illawarra would receive a $400 million stimulus across nine key measures, representing some two percent of our Gross Regional Product – which is unprecedented. The largest injections will be $192 million through the JobSeeker Payment Extension and $125 million in personal income tax measures.
This is money back into our pockets that, should we feel confident enough, we are likely to spend at least half of according to the ABS.
On the flipside, there are missed opportunities in this Budget.
The turmoil created by COVID-19 has seen one of our largest societal failures go unaddressed, despite its presence at the centre of the crisis. I am talking about the aged care sector which has had to protect our most vulnerable while being un-reformed and under-funded. Six out of ten aged care homes operate at a loss. Yet despite relatively minor funding in the budget, the sector is being asked to limp along at least until the Royal Commission delivers its final report in February next year.
Commentary that women have been disenfranchised in the budget has its basis in the fact that they have been subject to greater harm through the pandemic. The Illawarra’s three most female-dominated professions were the hardest hit; being accommodation and food services, education and training and retail. This is seeing women withdrawing more superannuation than men, and sadly their risk of domestic violence has further increased.
Labor Leader Anthony Albanese’s budget reply speech on Thursday addressed the gender gap through his promise of significant increase to child care subsidies to encourage more women to work more hours.
Finally, of $7.5 billion in infrastructure funding announced to bring forward major state projects, the Illawarra missed out; despite our forecast population growth and worthy road upgrades in the Mount Ousley Interchange and Picton Road.
Now that we are officially saddled up with a trillion-dollar debt as part of a ‘once in a generation’ budget, we need to ensure that it remains precisely that. We cannot afford any new outbreaks, and we certainly cannot tolerate another pandemic.