- The Federal Budget and its many big policy items have now been revealed.
- Various groups and sectors have now had a chance to pore through the detail and give their two cents.
- This is how each reckons they’ve fared.
- Visit Business Insider Australia’s homepage for more stories.
A Federal Budget is one of the clearest indications of what a particular government values and where its strategy lies.
That’s no more true than at the moment, as the Morrison government tries to mount a recovery out of Australia’s first recession in three decades.
Having leafed through the Budget documents, this is how various groups of Australians are reacting and who is emerging better, or worse, than others.
Economists warn there are major risks to this government’s strategy
Economists have appeared lukewarm about how this plan bodes for Australia’s economic recovery.
Betashares chief economist David Bassanese said that while the initiatives are “well designed” and will provide a “near term jolt” in stimulus, there’s a risk the government may have overshot some measures.
“Bringing forward significant stimulus is not without risk, in that much of the deficit-financed spending might prove to have been unnecessary if the economy bounces back more quickly than expected,” Bassanese said.
“This is particularly so with the instant tax write-off for virtually all corporate capital spending over the coming year. Whereas the RBA can raise interest rates if it cuts rates too far too fast, fiscal stimulus can’t so easily be reversed.”
This leaves Australia with a greater likelihood of booming too quickly. While that sounds like a reasonable outcome, it could leave Australia with little in the tank should it hit stormy seas further down the track.
Especially given the fact that those same measures are already going to take the national debt to within spitting distance of $1 trillion.
“It’s already been evident that the economy is coming through the COVID-crisis somewhat better than first feared,” Bassanese said.
“There is now a greater chance that the RBA leaves interest rates untouched for the foreseeable future – which ultimately should be welcomed to avoid the risk of housing and share market bubbles.”
The tech sector is just happy to have avoided cuts
Similarly, tech companies appear to have neither won or lost much under the strategy.
While the government had been threatening cuts to things like their research and development tax incentive (RDTI), the sector passed through the Budget relatively unscathed.
“The change in direction on [the] RDTI is welcome. Once [the government was] planning to drag $1.8 billion out, now they’re putting $2 billion in,” Karl Redenbach, CEO of software company LiveTiles said.
While he guessed it’s largely old money that’s being put back in, he said the sector would welcome at least having the incentive intact.
But with the instant asset write-off being the cherry on top for businesses, there were also few opportunities for companies whose IP is intangible.
“The heart of the budget for business is the $26.7 billion in asset write-downs. Tech companies are predominantly made up of highly educated people and a bunch of laptops so there’s a low ceiling on the benefits for companies like us,” Redenbach said.
Meanwhile, funding for the NBN and the CSIRO were welcome additions.
Clean energy may have won out
While Scott Morrison may be well-known for lugging a literal piece of coal into Parliament, there was surprisingly green news in his government’s Budget.
There were just $53 million committed towards gas development and zero dollars for coal, while more than $3.5 billion was committed to a clean energy transition, according to climate think tank Beyond Zero Emissions.
“The recent policies released by the Government and the measures announced in the Budget are a promising endorsement of the benefits of a clean economic recovery,” executive chair Eytan Lenko said.
Lenko includes in that latter figure the $1.5 billion manufacture spend which he says will electrify Australia’s industrial base, as well as $250 million to unlock more renewables.
He said now was the time for Australia to “seize this moment” to become a world leader in renewables.
“There are trillions of dollars of private capital looking for clean projects to back. A global race is underway to be the friendliest and lowest risk home for that capital to be invested and for new technologies and solutions to be developed,” Lenko said.
“Australia has an enormous opportunity to capitalise on our comparative advantage in renewable energy and to upgrade our industry and infrastructure to harness the benefits of new technology energy.”
The young, women and the vulnerable
More than once the Treasurer made it clear this was a budget for the young.
With support for a huge number of apprenticeships, short courses and wage subsidies specifically targetted at under the under 35s, the youth were catered for in more ways than one.
However, while providing a “glimmer of hope” to some, those that inevitably fall between the cracks will be left without much help at all, according to the Australian Council of Social Serice (ACOSS).
“The Federal Budget had failed to deliver a permanent, adequate JobSeeker rate. It leaves more than two million people receiving higher income support uncertain about their future beyond the end of the year, when income support rates will go to their pre-COVID levels – which, for JobSeeker, was $40 a day,” CEO Cassandra Goldie said.
Goldie pointed out there was little for female-dominated sectors — with much spending going to manufacturing and infrastructure instead — while tax cuts wouldn’t reach the growing ranks of unemployed persons.
ACTU President Michele O’Neil pointed out that women would also lose out disproportionately without child care support.
“There is a real missed opportunity to pick up ideas like free childcare to give women the best chance to get back to work,” O’Neil said.
Social housing was a missed opportunity
With increasing financial pressure to be especially felt by low-income earners, there was little in the way of boosting the safety net.
Both Labor and social groups had lobbied for greater investment in the construction and upgrading of social housing but were left frustrated by the government.
“This was an opportunity of a lifetime to kill two birds with one stone, by creating jobs at the same time as creating homes, so that everyone has a decent, affordable place to live,” Kate Colvin, spokesperson for housing campaigners Everybody’s Home, said.
“Building 30,000 social housing properties over four years [would] create 18,000 construction-related jobs a year and help pull Australia out of recession.”
The call was echoed by the Community Housing Industry Association NSW.
“In NSW alone, we have over 50,000 households on the social housing waiting list,” CEO Mark Degotardi said.
“That queue will only grow as the economic impact of this pandemic plays out. Rental affordability has halved since March for people on income support and homelessness in NSW is expected to increase by as much as 16,000 people as a result of COVID-19.”
Older Australians delivered a mixed bag
In what largely appears to be a running trend, the peak body for Australia’s older guard said there were some victories and some disappointments throughout the Budget.
The Council on the Ageing (COTA) welcomed the extra 23,000 supported home care places but said nothing was being done to make waiting times reasonable again.
With an emphasis on younger Australians, chief executive Ian Yates said the Treasuer had forgotten to extend like measures to the older demographic.
“We are disappointed there is no parallel support to keep older Australians in work. They are equally vulnerable to redundancy, age discrimination and being locked out of the workforce, and we are fearful this will be exacerbated by the failure to match youth subsidies,” he said.
On the other hands, there were some small wins.
“Pensioners will be very pleased about additional pension supplements of $250 in December and $250 in March, a positive response by government to our strong lobbying for additional help to pensioners at a time that the indexation formula did not deliver an increase in the pension rate.”