Federal treasurer Josh Frydenberg has handed down his second budget to somewhat muted applause, with the government’s jobs-focused recovery taking the form of hiring incentives to employ new workers under 35 and tax breaks to get the Australian people spending.
The 2020-21 budget outlined a monster deficit of $213.7 billion this year, and touts $17.8 billion in tax relief for cash-starved Australians with the intention that this money will be redirected back into the economy.
These cash injections could go some way toward buoying the retail sector, argues Pitcher Partners’ Mark Harrison.
“An increase in disposable income around the average wage should flow through to consumption,” Harrison said.
“There is a question whether all of the increase will be spent, or will some be applied to debt reduction or savings given consumers are maybe feeling a little more at risk in regard to job security or are generally conservative.”
With much of the tax cuts coming to middle and high income earners, there is little in the way of historical precedent to back up the government’s top-down approach – historically its low income earners that spend the most on discretionary goods, and were the primary driver in pulling Australia through its mandatory lockdown period earlier this year.
“Overall the stimulus is significant, and if successful, the reignition of the economy will help all retailers,” Harrison said.
Those who have already lost their job still face the prospect of a below-poverty-line JobSeeker payment come next year – putting millions of Australians into a position where they can only shop for essentials.
However, the budget outlines the next phase of the Coalition’s JobMaker program, which offers $4 billion of hiring credit for up to 12 months for employers who hire people 35 and under – something Frydenberg said could support the creation of 450,000 jobs.
The scheme will pay $200 a week for new employees aged 16 to 29, and $100 a week for employees aged 30 to 35, and will be paid for a year from when the employee starts.
These workers will need to work at least 20 hours a week, and will need to have been a recipient of JobSeeker, Youth Allowance or Parenting Payment.
And while there is some cross over, the JobMaker hiring credit is expected to take over as the main employment stimulus once JobKeeper expires in March, effectively reducing wage support from the current levels of $1200 a fortnight for fulltime workers and $750 for part time, to $400 a fortnight based on hours worked.
“For those millions of Australians who are out of work, this is going to be their key ingredient to get their job back,” Business Council of Australia’s Jennifer Westacott told 2GB.
“It means a business will hire a young person and get that extra incentive to put somebody on… If you take this budget in its totality, I do think it has… specifically targeted those young people who are very vulnerable for not being able to get back into work.”
Businesses are also being encouraged to get back to investing with a $26.7 billion instant asset write-off scheme available for all but the biggest businesses.
Starting October 6, businesses can claim the full value of eligible assets that are installed before June 30, 2022 – allowing more business owners to invest in plant and equipment to kickstart its Covid recovery.
And, through the introduced loss carry-back scheme, previously-profitable businesses that are struggling in the current economic environment will be able to claim back some of the taxes paid during last financial year.
This could deliver some financial relief to businesses that have been hit particularly hard by the change in consumer spending and bricks-and-mortar shutdowns.
And while the focus on supporting business and young Australians was strong, it’s focus on women was not.
Despite having stated the budget would have a particular focus on one of the hardest hit parts of the Australian populace, women, there was little to show for it – with less than one third of a per cent ($240 million) promised to a Women’s Economic Security Statement.
SDA National Secretary Gerard Dwyer called it “a blue budget for a pink recession”.
“More women than men are casuals and therefore not eligible for JobKeeper, more women than men work in retail, especially in fashion, furnishings and homewares – all sectors hit hardest by closures and reductions in trade,” Dwyer said.
“It’s nothing more than an insult to the tens of thousands of women who have suffered most from the Covid-19 recession and borne more than their share of job losses and subsequent insecurity.”