The Treasurer’s budget speech on 11th May 2021 did highlight some impressive numbers. The economy contracted only 0.2 per cent last year, outperforming all other major developed economies. Unemployment only reached 6.9% and is expected to fall to 5.5% this financial year.
These numbers have obviously come at a cost though. The Budget’s underlying cash balance for 2020/21 is expected to be a deficit of $161 billion whilst the government is hopeful the deficit for 2021/22 will reduce to $106 billion. Estimates for net debt is a peak of $980 billion in June 2025, or 41% of GDP – a mind-boggling amount!
Clearly we have fared remarkably better than the majority of the world when it comes to the pandemic. One can only assume future growth numbers are going to be heavily reliant upon the worldwide vaccine program.
The Government’s immediate focus is on expenditure measures targeting a range of social and economic challenges. While BLG Chartered Accountant, Sarah Pogson covers the Federal Budget tax Impacts, here is a quick snapshot of some of the more social-driven measures.
Aged care package
The government has announced a $17.7bn package aimed at clearing the home care waiting list within two years, mandating minimum care time in residential aged care homes and boosting the workforce.
The government has announced a $1.7bn package for increased childcare subsidies, which focus on low and middle-income families with more than one child.
Early childhood education funding
The budget will provide $678m over two years to increase preschool participation for all Australian children in the year before full-time school to 600 hours a year, or 15 hours a week.
Higher education funding
Funding is being aimed at helping providers respond to “new opportunities” arising from the pandemic. It includes $26.1m over four years to help non-university providers attract more domestic students to short courses, and $9.4m in grants of up to $150,000 to providers to support online and offshore delivery models.
New migrants to wait for benefits
All new migrants will be forced to wait four years to access government benefits under a plan to save $671m. The cost-cutting measure will apply to all those granted residency from 1 January next year.
The government will provide $1.9bn over five years for vaccines. This will include $777.8m for the surge workforce, GPs and pharmacists to administer them; $510.8m in payments to the states for the rollout; $358.8m for monitoring and reporting; $238.8m for distribution logistics and storage; and $6.7m for the communications campaign.
COVID-19 and Medicare spending
The government will provide $879m over two years to support Medicare, including pathology for COVID-19 testing, tele-health services, commonwealth respiratory clinics, access to the pharmaceutical benefits scheme, supporting regional and remote Indigenous communities, and mental wellbeing support through Beyond Blue.
Domestic violence services
The budget provides $357m over three years for states to invest in services to support women and children who are experiencing or at risk of violence.
Mental health funding
A $2.3bn mental health package has been announced for a new network of counselling clinics catering to Australians over 25 years of age.
Funding for suicide prevention
A National Suicide Prevention Office will be established, and will be the centre-point of a $298m “whole of government approach to suicide prevention”, which includes expanding a prevention and support program.
A commitment of $15.2bn over 10 years has been made for road, rail and community infrastructure projects as part of a stimulus measure to support employment in the post-pandemic economy. Most of the big-ticket projects were tabled by the government before the budget, including $2bn for the Great Western Highway upgrade from Katoomba to Lithgow.
Drought relief funding
A drought package of $212m includes $173m for the future drought fund over four years. The government will waive farm business income reconciliation debts incurred by recipients of a government scheme in place during the peak of the drought.
The government has set aside $1.2bn over five years to improve Australia's capability to prepare for, respond to and recover from natural disasters. This includes the establishment of a National Recovery and Resilience Agency at a cost of $61.1m.
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