It seems like only yesterday Treasurer Josh Frydenberg was unveiling the budget he promised would drive Australia out of pandemic doldrums. Abandoning the deficit-fetishism that has plagued politics for decades, he promised big-spending measures. And if the recent drops are anything to go by, he’ll promise more of the same on Tuesday.
But seven months later, many of Frydenberg’s signature splashes — wage subsidies and women’s economic security — have failed to have a big impact. And it’s unlikely many of the big assumptions underpinning that budget’s optimistic projections will play out.
The JobMaker hiring credit was pretty much the lead item in Frydenberg’s last budget speech. The $4 billion scheme was meant to use wage incentives of up to $200 a week to hire additional workers aged 16 to 35. Importantly, it was supposed to smooth the winding up of JobKeeper in March, which could cost up to 150,000 jobs.
Right from the start there were concerns about JobMaker incentivising employers to sack older workers and replace them with younger, subsidised ones. Treasury’s internal documents revealed employers could use the scheme to sack one full-time worker and put on three part-time workers.
By the time JobKeeper wound up, only 609 people had been hired using JobMaker. The government said the under-use of the scheme was Labor’s fault for talking it down.
Another big item was a women’s economic security statement, intended to grapple with the gendered effects of the COVID-19 recession. But numerous media outlets listed “women” as budget losers in their coverage because the $240 million package was largely concerned with boosting female representation in STEM, and had little to help those who’d lost work during the pandemic. And there was nothing for older women.
Since then, the government has come under fire for its perceived tone-deafness on gender-related issues. No wonder the drops about billions being spent to fix the government’s “women problem” are already in the media.
The regions were big winners. But there have been a few cracks in some of the measures. The Building Better Regions Fund was extended in October; however, this month reports revealed Deputy Prime Minister Michael McCormack and a “secret” group of ministers had been pork-barrelling the fund before the last election.
Meanwhile, the government’s asset tax write-off has led to a boost in investment in farm equipment, but agricultural accountants have warned about the fine print, where purchasers might be whacked with extra taxes on purchases years down the track.
Overall, Frydenberg struck an optimistic tone while unveiling his last budget. The message was Australia had handled the pandemic successfully and our recovery was on track to look pretty V-shaped. And while the economy is stronger than many anticipated a year ago, its ongoing health was underpinned by some pretty big assumptions.
First, the 2020-21 budget assumed a vaccination program would be “fully in place” by late 2021. But with the rollout being bungled by the government and concerns about AstraZeneca’s side effects, timelines are effectively out the window and many Australians won’t be fully vaccinated until next year.
Another assumption was that international students, migrants and tourists would gradually start returning in the latter half of 2021, with pilot programs to bring in small cohorts of students getting under way late last year. But international students have no certainty about their return, pilot programs have failed to take off, and despite the New Zealand bubble, international travel might not be guaranteed even after Australia is fully vaccinated.
Still, not every assumption is working against the treasurer. The budget’s GDP forecasts assumed the iron ore price would fall to US$55 ($70) a tonne by the end of June. Right now it’s booming at US$193 ($248) a tonne, a boost that could last for 18 months.
This article was first published by Crikey.
Kishor Napier-Raman is a journalist at Crikey.
