All eyes will be on the Federal Budget tomorrow night, and it appears likely to be a big-spending budget, with a bit of something for everyone. Treasurer Josh Frydenberg has already said there would be no sharp pivots to austerity, in a significant overhaul of the Federal Government’s long-standing fiscal strategy.
The Government is right to keep the stimulus coming to help maintain the momentum of Australia’s impressive economic growth over the last six months to bring the rate of unemployment down faster. But we are concerned there is little in the announcements so far that will underpin a shift to business-investment-led growth, and hence sustained long-term economic and jobs growth. The Budget’s vision will need to match the economic ambition – Australia’s unemployment rate has only really had a four in front of it for a sustained period once in the last 40 years, between 2006 and 2009.
With the Government confirming international borders will remain closed until well into 2022, in part because of problems with the vaccine rollout and deficiencies in the quarantine system, we will lose one of the critical drivers of Australia’s economic growth of last 10 years – migration. CEDA has been hearing from many members for months now that they are seeing significant skills shortages while borders remain closed. We hope to hear more from the Government on its plans to bolster the vaccine rollout and improve the quarantine system to help Australia’s borders to re-open as soon as it is safe to do so.
We have also seen several announcements of female-friendly budget measures, including more spending on childcare and measures to help single parents buy a home. This is shaping up to be the first budget with something approaching a gender lens since the Abbott Government abandoned the Women’s Budget Statement in 2014. It is great to see measures to address the economic challenges faced by women in this budget, but steps like these will do little to fix systems that are not working. More affordable housing would do more to address the lack of access to housing, rather than more stimulus that will simply add to demand, thereby increasing house prices further. This was clear in CEDA’s Home Truths: the role of housing in economic recovery. Similarly, on childcare, we would like to see measures that can help bring down costs overall, rather than offering subsidies that may encourage providers to increase their fees, particularly if there are workforce shortages.
There are also promising reports that the Government will spend $17.7 billion over four years on an aged-care package, including measures to improve the pay and training of workers in the sector. We know there is much more to be done in this area, and we will be watching closely to see what the Government announces.
More broadly, we would like to see a concerted effort to address long-term unemployment in this budget. The $1 billion plan to extend the JobTrainer program for another 12 months, to train and reskill young workers, is a positive move. But a strong economy and a strong labour market alone do not create jobs for everyone, including in particular the many long-term unemployed who face complex employment challenges and barriers. Hopefully there will be some money to address this issue tomorrow night.
We will have more to say on these and other measures announced in the Budget tomorrow night. Look out for a Budget Briefing for members from our Chief Economist Jarrod Ball and the research team.
After the Budget, our annual State of the Nation forum in Canberra will be the next opportunity to engage in these important long-term conversations. This three-day forum from June 23-25 will focus on key topics including: Australia and Asia; Securing economic dynamism; Future-proofing exports and working with China; Rethinking tertiary education; Getting the cyber balance right; Defence funding and capability; Sustainable infrastructure and a special State Treasurers’ panel. You can find more information on the fantastic line-up of speakers we have confirmed so far, and register to attend, here.
Later this month, we are thrilled to introduce the first in a new event series In my experience: CEO insights, with outgoing Woodside Chief Executive Peter Coleman on Wednesday 31 May. In this series, outgoing CEOs will share their experiences as the leaders of major Australian organisations, discussing the traits of effective leaders and their perspectives on reforms to help Australia drive growth and prosperity. Sponsorship and corporate tables are still available. Register to attend the event in Perth here.
Next month brings the latest in CEDA’s regulators and policy makers series, with an address by Productivity Commission Chair, Michael Brennan on Tuesday 8 June. He will discuss the challenges facing business in the wake of COVID-19 and the economy’s “miracle recovery”. Sponsored by ExxonMobil. Register to attend the event in Melbourne here.
In the latest episode of our podcast Economists’ Corner, I joined ANZ senior economist Felicity Emmett, Equity Economics lead economist Angela Jackson and AMP Capital chief economist Shane Oliver to hear what they’re expecting from tomorrow’s Federal Budget. It looks like red is the new black for Treasurer Josh Frydenberg, who says there will be no sharp pivots to austerity in this Budget, in a dramatic change toof the Government’s fiscal strategy. But will the cash splash help drive long-term, sustainable growth? Listen to our panel discussion here.
CEDA Senior Economist Gabriela D’Souza addressed the National Press Club last week on the need to safely raise our migration intake back to normal levels to support the economic recovery. You can read that speech here.
And with aged-care spending likely to be a major focus of tomorrow’s Budget, our Senior Economist Cassandra Winzar considers how we can boost the workforce to implement the recommendations of the aged care royal commission. You can read that here.
A big welcome to our newest members, Amazon and Veolia. We are thrilled to have you join the CEDA community. And thank you as always to our many renewing members.
New Lead members
Renewing Lead members
Federal Department of Foreign Affairs and Trade
G4S Australia and New Zealand
Renewing Elevate members
Construction Skills Queensland
University of Melbourne
Renewing Discover members
People's Choice Credit Union
Scotch College Adelaide
Finally, as you know, at CEDA we strive to educate, inform and influence the big issues affecting Australia’s future. For more than 60 years we have championed next-generation ideas to deliver better outcomes for Australia and improve people’s lives. As we look to reimagine Australia’s future following COVID-19, independent evidence-based research organisations like CEDA are more important than ever.
You can help directly fund our independent research by making a donation to CEDA today. All contributions of more than $2 are tax deductible, and any gifts over $50 will be acknowledged in our annual report. For more information and to support us, click here.
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Until next time, all the best.
CEDA – the Committee for Economic Development of Australia – is an independent, not-for-profit membership organisation.