After a once-in-a-century shock to our economy, the Treasurer has handed down a budget designed to combat the economic downturn and position Australia for recovery.
Despite announcing an underlying cash deficit of $213.7 billion, Australia has managed to fare relatively well compared to other countries in terms of managing the virus. As a result, there has been a smaller impact to our economy and the budget has focused on key objectives of restoring business and consumer confidence.
In response to unemployment and under-employment caused by COVID-19, the Government has adjusted its policies, recognising that economic growth and job creation will be essential to economic recovery and improving the budget position over time.
In an attempt to build business and consumer confidence, the Government has announced several key measures, including:
JobMaker
To help support approximately 450,000 young Australians into jobs, employers will receive hiring credits for employing younger workers aged between 16-35 years old.
Tax cuts
Fast-tracking Stage 2 of the Personal Income Tax Plan to provide over 11 million low and middle-income earners with a one-off additional tax benefit. In 2020-21, low and middle-income earners can receive tax relief up to $2,745 for singles and up to $5,490 for dual income families, which means more money directly back into the family budget.
Investment Tax Allowance for businesses
Businesses with a turnover of less than $5 billion will receive temporary tax incentives to put towards new investments and boost their cash flow.
In addition to the above, the Government has also announced several other stimulus packages, including:
- Infrastructure investment totalling $10 billion over four years to boost construction jobs
- An extra 10,000 places added to the First Home Loan Deposit Scheme
- Additional support payments of $250 in December and March 2021 for pensioners.
Recognising the serious mental ill-health implications of COVID-19, the Government has also committed an additional $148 million towards mental health support to double the number of Medicare-subsidised psychology sessions from 10 to 20 a year.
Closer to home, the Hunter will share in $100 million over two years to support Regional Recovery Partnerships and encourage regional tourism.
While spending at this scale can be hard to comprehend, motivation behind this year’s budget is strongly focused on stabilising the economy and driving economic recovery. These key changes may also provide customers with the opportunity to pay off their home loan sooner and support local businesses.