Jobs-Driven Federal Budget 2021-22: What it Means for the Economy

Summary

• The recently released 2021-22 Federal Budget focuses on job creation to bolster the economic growth after COVID-19.
• The government expects the unemployment rate to revive five times faster than the 1990s recession on the back of stronger-than-anticipated economic recovery.
• The government has committed a significant investment on infrastructure projects, which are targeted to support over 30,000 jobs across Australia.

The Australian government has recently released its 2021-22 Federal Budget, which retains the momentum of the nation’s economic recovery.

In the latest budget, the government has announced lower taxes for hard-working Aussies besides providing business tax reliefs to create jobs in the economy.

To support jobs now as well as into the future, the government has decided to build on its 10-year infrastructure investment pipeline. As anticipated, the budget clearly focuses on job creation to bolster economic growth after COVID-19.

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Focus on Job Creation

The government has declared an additional AUD 7.8 billion in personal income tax cuts to help over 10 million low-and middle-income earners. Lower taxes mean that hard-working individuals will keep more of what they earn, which will allow them to spend more and help grow the Australian economy and create more jobs.

Additionally, the government has decided to deliver over AUD 16 billion in tax cuts to small and medium enterprises by 2023-24, with about AUD 1.5 billion flowing in 2019-20. The business tax incentive is also expected to foster activity and employment in the short run, besides increasing the economy’s productive capacity for the future.  

The government is also investing AUD 6.4 billion in 2021-22 to build the skills that the nation’s economy requires to thrive in a post-COVID-19 world.

As women were heavily impacted by job losses due to COVID-19 lockdowns and restrictions, the government has taken action to get women back into the workforce. The government is investing about AUD 1.7 billion in order to make childcare more affordable and uplift women’s workforce participation.

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To support vulnerable unemployed Australians into jobs and foster labour market participation, the government has decided to invest about AUD 4.6 billion. Towards this end, the government has decided to increase job subsidies, deliver foundational skills, invest in youth employment services, encourage self-employment, expand the local jobs program, and deliver more job fairs.

Significant investments in digital infrastructure have also been announced to support Australian businesses and workers.

On the back of a strong and earlier-than-anticipated economic recovery, the government expects the unemployment rate to revive five times faster than the 1990s recession. The recovery in the unemployment rate is likely to reduce the potential for longer‑term scarring in the Australian labour market while supporting growth in the medium term.

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Infrastructural Support

To further support the nation’s economy and job market, the government has committed a further AUD 15.2 billion over the next 10 years towards rail, community and road infrastructure projects across Australia. These commitments are targeted to support over 30,000 jobs across Australia over the lives of these projects.

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It is worth noting that 45 projects with a government investment of AUD 7 billion have already been completed since the start of 2020-21. The work has also started on 124 infrastructure projects with a government investment of AUD 8.4 billion.

The recently announced commitments build on the 100,000 jobs already being supported by infrastructure projects currently under construction via the AUD 110 billion pipeline. The government investment in additional infrastructure is expected to secure the nation’s economic revival while driving the unemployment rate down.

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