The Government said this budget would be about jobs, but job creation must be underpinned by economic activity.
To this end, measures to support short-term demand and household spending, including top-up payments for aged pensioners, and bringing forward stage two of the income tax cuts, should boost confidence and spending at a critical time for many businesses, leading into Christmas and the holiday period.
“The focus on the training and employment of young Australians, including those suffering mental health issues, is crucial,” CEDA Chief Executive Melinda Cilento said.
“These measures will help to prevent a generation of young people being locked out of the labour market in this recession.
“CEDA has long advocated for measures to boost business investment, as well as greater support for research and development. We welcome the focus on business tax and investment incentives in this budget. Both will be critical to supporting innovation and productivity to drive sustained job creation.”
However, she said the budget disappointed in several key areas.
“We had been expecting more measures that directly address the challenges of this uniquely ‘pink recession’,” Ms Cilento said.
“We are also disappointed in the lack of investments in social housing and in social infrastructure more broadly.
“Access to and affordability of childcare remain very important barriers to women taking on jobs or increasing their hours of work, and improving both remains a priority if we are to boost female workforce participation.
“It was also disappointing that the Government once again failed to permanently increase the rate of the JobSeeker unemployment benefit. This is a glaring omission during Australia’s first recession in 30 years.”
The budget papers also present a stark outlook for immigration and population. Net overseas migration will be negative for a number of years, and as a result, population growth is set to be the lowest in more than 100 years.
“Like it or not, population growth has been an important driver of economic growth in Australia, in the years ahead we will be growing on our own without the tailwinds of strong net migration,” Ms Cilento said.
Despite the scale and breadth of the stimulus sugar hit, this budget’s assumptions of a rapid recovery remain finely balanced.
“The budget forecasts assume that the job measures and broader stimulus will work as expected, but if households don’t spend as much of the tax cuts, or if businesses are reluctant to hire and invest, these forecasts won’t be realised, and support will need to respond accordingly,” Ms Cilento said.
“The best way to help Australia emerge from this recession is to create an agenda for sustainable, long-term growth that positions us well in an era of digital globalisation and energy transition.
“CEDA hopes the measures announced tonight can build us a bridge to the next budget, now just seven months away.”
Treasurer Josh Frydenberg said in his budget speech: “we owe it to the next generation to ensure a strong economy, so that their lives are filled with the same opportunities and possibilities that we have enjoyed”.
In May’s budget, we look forward to seeing a narrative for the growth and serious reform that will provide these opportunities.
Budget update response
“CEDA welcomes Labor’s focus on childcare funding, which was a glaring omission from this federal budget, and is important to help more women get a job or increase their hours. Measures targeting the electricity transmission network are also sorely needed and will support security of supply for households as well as greater reliance on renewables,” CEDA CEO Melinda Cilento said following the Labor budget reply.
“It is also important that Labor supports the Government’s income tax cuts and incentives for business investment, both crucial stimulus measures that will help drive recovery.
“Looking to hear more from both sides on strategies for mental health and aged care – both critical to future prosperity – and a permanent increase to JobSeeker unemployment benefits. Neither Labor nor the Government has articulated how they will drive a sustainable, long-term growth agenda for the nation as we emerge from the COVID-19 pandemic, including building on the momentum of the recent rapid digitisation of the economy. We look forward to hearing more on this in the next budget, now just seven months away.”
Melinda Cilento is available for further comment and interviews.
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CEDA – the Committee for Economic Development of Australia – is an independent, membership-based think tank.
CEDA’s purpose is to identify policy issues that matter for Australia’s future and pursue solutions that deliver better economic and social outcomes for the greater good.
CEDA has almost 700 members including leading Australian businesses, community organisations, government departments and academic institutions. Our cross-sector membership spans every state and territory.
CEDA was founded in 1960 by leading economist Sir Douglas Copland. His legacy of applying economic analysis to practical problems to aid the development of Australia continues to drive our work today.