Pre-budget speech reveals focus will be on driving down unemployment
Treasurer Josh Frydenberg’s 2021 budget will focus on driving unemployment down to below 5% in order to kickstart Australia’s economy, he is expected to announce today.
In a pre-budget speech in Canberra today, Frydenberg will signal that the budget includes fiscal stimulus to bolster the private sector and that the government will not be taking “any sharp pivots towards austerity”. The measures aim to bring the unemployment rate below 5%, a level that has not been achieved since the 2006 mining boom.
Taking advice from the RBA and the Treasury, Frydenberg said that to stimulate Australia's wage growth the unemployment rate will "now need to have a four in front of it". The budget is expected to forecast that an additional 200,000 people in work will equate to a "$5 billion turnaround" in the budget, through less people accessing government support and more tax revenue.
“Private sector growth is the essential ingredient in maintaining a strong economy and a sustainable fiscal position over the longer term, you can’t have one without the other,” Frydenberg says, according to his draft speech.
“Large scale government support is no substitute for sustainable jobs in profitable firms.”
The 2021 budget marks a major shift from the policy of pre-Covid years when focus was on fiscal responsibility and keeping debt low. But COVID-19 has wreaked havoc on the economy, leading to a deficit of at least $150 billion in the current year. In the budget due to be released on May 11, Frydenberg is expected to forecast a deficit of at least $50 billion for 2021-22.
Australia’s unemployment rate currently stands at 5.6%, just 0.4% above pre-pandemic levels. But with the end of JobKeeper, experts believe that number could rise. Frydenberg’s budget is expected to outline the government’s key strategy to fire-up private sector growth.
