The programs described in Frydenberg's speech are both large and historic. He notes that Jobkeeper is a $101 billion program, supporting 3.5 million jobs. This program has helped some 800,000 small and medium businesses to remain in business. Jobseeker doubled the safety net. Together, these actions have saved 700,000 jobs.
JobMaker now begins. The JobMaker hiring credit will be payable for up to 12 months and available to employers who hire those on JobSeeker aged from 16 to 35. This will support 450,000 jobs for young people. An additional $1.2 billion will create 100,000 new apprenticeships and traineeships with a 50% wage subsidy for businesses who employ them.
From Budget Night, over 99% of businesses will be able to write-off the full value of any eligible asset they purchased for their business. This will be available for small, medium and larger businesses for a turnover of up to $5 billion, until June 2022.
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The Treasurer notes that this will dramatically expand productive capacity of the nation and create tens of thousands new jobs. These programs and others generate a dramatic expansion of the Australian budget deficit that we can see in Figure 3 below. These deficits only gradually decline over the next decade. Still, they generate enormous support for a broader Australian recovery.
Figure 3: Underlying cash balance as a share of GDP
SOURCE: Budget Paper No 1 Statement No 3 Fiscal Strategy and Outlook – Chart 4 - Page 3-28
Where the money goes
In Figure 4below, we see expenditure outlined in Budget Paper No.1: Budget Strategy and Outlook 2020-21; Statement 5, Expenses and Net Capital Investment. This Budget proposes to spend a total of $670.3billion. The largest section of spending by far remains Social Security and Welfare. This will consume $227.5billion or 34% of total spending. Health expenditure consumes $93.8 billion or 14% of total spending. Education comes next with $41.7 billion or 6.2% of total spending. Only then do we find Defence with $34.4 billion or 5.1% of total spending.
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Figure 4: Estimates of Australian General Government Expenses by Function
SOURCES: Budget Paper No.1: Budget Strategy and Outlook 2020-21 Statement 5, Expenses and Net Capital Investment; Morgans
This article was first published by Morgans.
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