Today’s Budget update confirms Australia’s economy is rebounding strongly.
Unemployment is lower, GDP growth is higher, and the bottom line has improved since the Budget just ten weeks ago.
The road ahead is challenging. Our recovery is dependent on our continued success in containing COVID-19.
While a number of countries are facing renewed outbreaks, Australians are approaching Christmas with optimism and hope.
Consumer and business confidence are back at pre-COVID levels.
85% of the 1.3 million Australians who either lost their jobs, or saw their working hours reduced to zero, are now back at work.
The September quarter saw an increase in GDP of 3.3%. This is the biggest quarterly rise since 1976.
Australia is outperforming all of the major advanced economies.
In today’s update, real GDP is forecast to grow by 4.5% in 2021, following a reduction of 2.5% in 2020.
This year the Euro area is forecast to contract by 7.5%, Japan by 5.25% and the United States by 3.75%.
With 734,000 jobs created over the last six months, the labour market has performed better than expected.
We have come a long way from Treasury’s initial estimate that unemployment could hit 10% (or 15% in the absence of JobKeeper).
Our faster-than-expected rebound is helping the Budget bottom line.
The deficit is expected to be $197.7 billion – an improvement of $15.9 billion, compared to what was expected at the Budget.
The improved economic outlook increases expected company tax and GST.
Around 640,000 fewer people are on JobKeeper in the December quarter, compared to what was expected at the Budget.
Australia’s debt levels, even at their peak, remain less than half the average seen across advanced economies today.
Recently, we have also announced new expenditure, on 10,000 home care packages, the rollout of vaccines, and the temporary extension of the Coronavirus Supplement.
There still remain downside risks to Australia’s economic recovery.
These include the timing, distribution, and effectiveness of the vaccine in stopping the spread of the virus globally, and trade tensions.
However, today’s Budget update provides further cause for optimism.
Australia’s economic comeback is underway.
Tax cuts, business investment incentives, the JobMaker Hiring Credit, HomeBuilder, and record investment in infrastructure and skills are part of the Morrison Government’s Economic Recovery Plan.
With confidence returning, we are placed better than virtually any other developed nation to come back stronger on the other side of COVID-19.