Budget’s Illusory Hope for Business-Led Recovery
The Commonwealth government tabled its 2020-21 budget on 6 October, six months later than the usual timing because of the dramatic events associated with the COVID-19 pandemic and resulting recession. There is no doubt it is a budget unlike any other in Australia’s postwar history. While the budget certainly unleashes unprecedented fiscal power, its underlying logic and specific policy design are unsatisfactory in many ways. We present here analysis and commentary on several aspects of the budget, drawing on input from all of the Centre’s research staff: Economist and Director Dr. Jim Stanford, Senior Economist Alison Pennington, and Economist Dan Nahum.
Key conclusions of our analysis include:
- This budget says explicitly that Australia’s economic reconstruction after COVID-19 is to be trusted almost entirely to private business – helped along with generous tax cuts and business subsidies.
- The need to strengthen public services (like health care, child care, and higher and vocational education) is largely ignored, as is the need to preserve and strengthen income security programs (with the phase-out of JobKeeper and cuts to JobSeeker going ahead).
- Tax cuts, whether targeted at businesses or high-income households, will have little impact on actual spending and job-creation.
- The government needs a more forceful, hands-on, and sustained reconstruction plan to ensure that the economy does not get ‘stuck’ in its current state of partial recovery. That needs much more public sector leadership, vision, and funding.
- The government admits that wage growth is going to get weaker before it gets stronger – but is doing nothing about that critical problem (which will undermine consumer spending far more than tax cuts will stimulate it).
Download our full review of the 2020-21 budget below.
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