Federal Budget 20/21
Jobs! Jobs! Jobs! has been the mantra of the federal government since they started “leaking” details of the budget before its official release last night. And it seems they have put their money where their mouth is.
Employers, no matter how big or small they are, will receive up to $200 a week for each new employee they take on providing they meet certain criteria; employees will be required to work a minimum of 20 hours a week, and must have received the JobSeeker, Youth Allowance or parenting payment for at least one of the previous three months. Employers must show that their payroll has increased as well as number of employees to qualify.
The scheme is to cost $4B over 12 months if the government’s prediction of 450,000 new positions is to be believed and could come in to law on Wednesday if legislation is passed in an omnibus bill to be introduced by the treasurer. Called JobMaker Hiring Credit it is sure to go done well with employers.
The government is also pending $1.2B on wages subsidies in the hope that 100,000 new apprentices and trainees will enter the workforce. This could be a huge boost for industries that still require hands on workers for skilled positions and hold back a looming shortfall in experienced tradesmen.
A win for businesses with a turnover of up to $5B will be the write-off on assets up to June 2022. It is for capital equipment and will be welcome relief for those businesses looking to expand their business or make necessary capital purchases. The government is hoping it will be a game changer, unlocking investment and boosting the order books of the nation.
Taxpayers have had a win in the budget with across the board tax cuts for all tax brackets. The percentage of less tax people will be paying ranges from 3.8% for the highest bracket up to 21.4% for the those in the lower bracket; although the dollar figure is higher for the top bracket.
Some will benefit from the changing of the threshold for some of the lower brackets with people being able to earn more before tipping into a higher bracket. The government has forecast that the extra money the consumers will have will create an extra 50,000 jobs.
The government will lose out on $12.5B in tax takings for this financial year, which will obviously add to the mounting debt expected to be near a trillion dollars.
There are other incentives to get business going in what will be the biggest budget spend this nation has ever seen. However it is all predicated on the belief that there will be a vaccine for the Covid19 virus that has landed us in this predicament in the first place. It is a big assumption to make and if a vaccine isn’t forthcoming then the budget forecasts will be doomed for failure. For the sake of Australia we must hope that the assumption is right.
The Prime Minister and Treasurer have been quick to boast that this is the right budget for the right time to get spending going again. The question will be, will those receiving the benefits turn it over in to the economy or will they use it to pay down debt or increase savings? Only in due course will we know the answer to this. If it does go back in to the economy then the optimistic predictions of the government may come to fruition. If people hold on to it or just pay down debt then the less than optimal outcome will be pounced upon by the opposition who will make the most of it in the lead up to the next election.