During the Covid-19 crisis, Australia has achieved good health results while having fewer infection rates, hospitalization, and fewer death cases as compared to other countries. The emergency support of the Government offered an important lifeline to the economy during its first recession in the last 30 years. The economy of the country has recovered, and it is set to get back to pre-pandemic levels nine months earlier.
But still, covid-19 has an impact on the country, however, Australia is far better than other countries in the world to fulfill the economic challenges. Now, take a look at Australian Federal Budget Update 2021-2022 that is set to secure Australia’s recovery.
Budget 2021-2022: Securing Australia’s Recovery
Take a look at the below section to know what Australia’s new budget plan aiming to accomplish:
- Creating Jobs and Recovering Economy
- Around $7.8 billion tax cuts for those who fall in the category of low to middle-income earners, worth up to $1,080 for each person or $2,160 for income couples.
- Investing in the skills and settings to develop Australia’s digital economy.
- Ensuring the Essential Services
- Protecting Australians from covid-19 and investing in the vaccination programs.
- With an additional $13.2 billion, supporting Australians with disability by funding the NDIS.
- Building Resilient and Securing Australia
- Providing safety to Australians with the investment in national security and law enforcement capabilities.
- Offering help to the agriculture industry in achieving its goal of maximizing farm gate output to $100 billion by 2030.
- Protecting Australians from Covid-19
To keep Australians safe from covid-19, the Government is offering $1.5 billion to extend health responses. More than 2.5 million vaccines have been used. In this budget, the Government is also contributing $1.9 billion in the covid-19 inoculation.
- Supporting Home Ownership and Construction Jobs
- New Home Guarantee
The government is offering 10K places under the new home guarantee in 2021-22 by identifying the residential construction sector in creating jobs and developing the economy. It is specifically for first home buyers who build a new home with a five percent deposit.
- Family Home Guarantee
The government offers a pathway to home ownership to ensure single parents with dependants, irrespective of whether they are 1st home buyers or former owner-occupier. From 1st July 2021, there will be 10k guarantees available over four years to those single parents with dependants who are eligible to build a new home or buy an existing home by depositing two per cent.
- First Home Super Saver Scheme
Under the first home super saver scheme, the Government is helping home buyers to get home ownership sooner. From 1st July 2022, the Government will maximize the amount of voluntary contribution that can be issued under the scheme of first home super saver scheme from $30,000 to $50,000.
- Aged Care Amendments
In answer to the Royal Commission into Aged Care, Quality and Safety, the Government has decided to invest $17.7 billion over 5 years to make sure that older Australians will get treated with respect and care.
- Investment in Mental Health
The government is providing preventive and effective care for Australians. Having endured floods, drought, bushfires, and the covid-19 crisis, Australians have been recalled that we require to consider the mental health and wellbeing of a loved one and ourselves.
- Affordable Child Care
The government is offering an additional $1.7 billion in child care to maximize the subsidy for the second and next child.
- Lower Taxes for Australians who are Hard Working and Tax Relief to Businesses to Create Jobs
- To create more jobs and support household income, the Government has decided to deliver an additional $7.8 billion in tax cuts by maintaining the LMITO (low and middle-income tax offset) in 2021-22.
- Temporary loss carry-back is extended to incorporate the 2022-23 income years.
- The government will offer over $16 billion in tax cuts to businesses that fall in the category of small to medium by 2023-24.
- Personal Income Tax Cuts
The government will provide an additional $7.8 billion in tax cuts to support household income and create more jobs by maintaining the low and middle-income tax offset in 2021-22. Approximately 10.2 million individuals will get benefit from retaining the offset in the year 2021-22 that is worth up to $1,080 for each individual or $2,160 for dual-income couples.
Treasury estimates that the extension of LMITO will increase GDP by around $4.5 billion in the year 2022-23 and will create 20,000 jobs by the end of the year 2022-23. Genuine tax changes, top 20% of payers of tax are now 63% of all tax up from 60% three years back. Would it increase incentive, competitiveness, and productivity? Net cost $10 billion/year.
- Strategy is cost-effective – levels of debt stabilizing as share GDP.
- Special focus on: Aged care, child care, housing, and NDIS.
- Disappointing tax policy.
- The interest rate will retain for some years, but the bond rate might increase.
- Increased global growth and commodities point to higher AUD.
- More focus on jobs: job support/training, infrastructure, covid-19 support, industry support.
- Development in 2021 supported by households as saving rate develops, cautious business.
- House price set to increase 15% in 2021, 5% in 2022, investors’ increasing-regulatory controls, soft landing.
Proofs of cost pressure- closed borders, supply chains, reducing in 2022-23.