Thursday, 8 October 2020
The federal budget, delivered on Tuesday night, lays out a comprehensive economic recovery plan for the nation. The COVID-19 pandemic, on top of the tragic loss of life that it's caused, is also the biggest economic shock to hit the global economy since the Great Depression. The global economy through 2020 is forecast to contract by 4.5 per cent. In the last major economic crisis to grip the world, the global financial crisis—which was almost a decade ago—the world economy contracted by 0.1 per cent. So we're talking about something that is orders of magnitude bigger.
The 2020-21 budget outlines further measures to cushion the blow of the pandemic, to help accelerate the recovery and to rebuild our economy for the future. It builds on previous support measures, including JobSeeker, JobKeeper, cash flow relief for small businesses and early access to superannuation. All up, these previous measures plus those announced in the budget will amount to some $507 billion in government support since the on set of the pandemic—probably the biggest stimulus measure that the government has ever injected into the economy.
This year has been a hard one for many Australians, but we are emerging from this crisis together. Of the 1.3 million Australians who lost their jobs or had their hours reduced to zero in April, over half of them are now back to work. While the Australian economy is expected to contract 3.75 per cent in calendar year 2020, it's forecast to recover in 2021 and grow by 4.25 per cent. Unemployment is expected to peak around eight per cent in December and then begin to come down then. These are sobering figures, especially for those directly impacted and the unemployed. But, without direct government support, it's estimated that unemployment would have reached up to 12 per cent and stayed there for a prolonged period.
Although I know it's of little comfort to those Australians doing it tough, Australia has fared well in terms of managing the health and economic impacts of this crisis. Our deaths from COVID-19 are significantly fewer than in other developed countries. Of the 35 million cases worldwide and one million lives lost, Australia has had just 27,000 cases and, every one of these a tragedy, 894 deaths. Our death rate is around 33 per million. In France, it's been 14 times that, in the United States 17 times that, in the United Kingdom 18 times that and in Spain 19 times that. In terms of our economy, whilst our economy contracted seven per cent in the second quarter, in New Zealand the economy contracted by 12 per cent, in France by 14 per cent and in the UK by almost 20 per cent. We also entered this crisis in a strong fiscal position, having restored the budget to balance. Even with the additional spending in the budget on Tuesday night, our net debt to GDP ratio will remain low by world standards, peaking at 44 per cent, which will be roughly half the figure of that in the United Kingdom, one-third the figure of that in the United States and one-quarter the figure of that in Japan. We will manage this debt burden by restoring jobs, by growing the economy and by positioning Australia for future industries.
The budget lays out the strategy to rebuild our economy and to secure our future. There are measures in there to support households, with the budget bringing forward stage 2 of our income tax relief, increasing the low-income tax offset and lifting tax thresholds. As a result, more than 11 million Australians will get a tax cut backdated to 1 July. Low- and middle-income earners will receive up to $2,745 in tax relief for singles and up to $5,490 for dual-income families, compared with 2017-18. This will support consumption, support small businesses and support household budgets. There's also going to be a new JobMaker Hiring Credit to encourage businesses to hire younger Australians, payable for up to 12 months and available to those employers who hire Australians aged 16 to 35 who are on JobSeeker. The Treasury estimates that this will support around 450,000 jobs for young people.
The budget also commits additional money to create new apprenticeships and traineeships, with a wage subsidy for businesses who employ them. The budget also provides money for older Australians to retrain and to upskill, providing funding for 50,000 new higher education short courses in areas such as clean energy, information technology and agriculture. Business investment will be key to economic recovery, and the budget provides support for new investment. From Tuesday, businesses with a turnover of up to $5 billion will be able to write off the full value of any eligible assets they purchase for their business, with no limit on the value of assets eligible for full expensing. To complement this, businesses will be able to offset losses from this year against profits made in previous financial years back to 2018-19. These loss carry-back measures will provide instant relief for viable businesses that have hit hard times this year. This has been a tough year for many Australians but the budget charts a way out for us, for us to emerge stronger and more together. (Time expired)