On Tuesday 11 May, the Treasurer, the Hon Josh Frydenberg MP, delivered the Federal Budget 2021–22, his third Budget.
Two years ago, in his first Budget speech, the Treasurer announced that the Budget “is backin the black”. One pandemic later, there is only red.
So far, the Government has committed $291 billion (or 14.7% of GDP) in direct economic support for individuals, households and businesses. The Budget deficit for 2020–21 is forecast to be $161 billion, although that is almost $53 billion less than what was forecasted in last year’s Budget. The Treasurer has not produced an austerity Budget – net debt as a share of GDP is predicted to peak at just over 40% in 2024–25. “Debt and deficit” are seemingly no longer bad.
As emergency COVID-19 support concludes, the Government says it will focus on the transition to sustainable private sector-led growth to create jobs. The unemployment rate is forecast to fall to 4.75% by mid-2023 (lower than pre-pandemic levels).
The Government acknowledges that the continued economic recovery will rely on the effective containment of COVID-19 outbreaks both in Australia and abroad and will be a key factor in the timing of the reopening of international borders, which could weigh on the outlook for the tourism and education sectors.
Further, ongoing global trade tensions and the potential for further trade actions continue to pose risks to the outlook for Australian exports. More broadly, downside risks to the outlook for the global economy from ongoing outbreaks of the virus in major economies, including India, could have implications for Australia’s domestic economy.
Read our complete 2021-22 Special Budget Edition Newsletter here.