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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Despite Josh Frydenberg’s gigantic spend-up, his second budget contained very few big surprises after the carefully crafted run-up to the treasurer’s big night.
In the past week or so, big, multi-billion dollar initiatives have been announced on a daily basis, from an apprenticeship initiative to giving the regions and tourism a cash injection.
The bringing forward of already legislated tax cuts, due in 2022, has been flagged for months.
Even so, the spend-a-thon that will see the budget deficit balloon to a record $213.7 billion and government debt exceed $1 trillion for the first time is aimed at digging the economy out of recession and getting people back into work.
The budget is forecasting a huge acceleration of economic growth in the next financial year, from a contraction of 1.5 per cent in 2020/21 to brisk 4.75 per cent expansion.
From there on growth is expected to hum at a rate of 2.75 per cent to three per cent, something that hasn’t been seen for a while.
There is also hope that unemployment is not far from its peak, with Treasury now predicting a top of eight per cent later this year, rather than nine per cent, and by 2023/24 falling to 5.5 per cent.
But there is a big assumption to this somewhat healthier outlook, given how deep Australia’s first recession in three decades has been.
It relies on there being a COVID-19 vaccine by the end of 2021.
Mr Frydenberg explained if a vaccine is found six months earlier, that would give a $34 billion boost to the economy.
But he also warned if there was a second or third wave of virus cases in Australia, that could hurt the economy by $55 billion.
“There is a lot of uncertainty in this economic environment, it’s an unprecedented time,” he told reporters.
“We are leaving no stone unturned to get access to the vaccine.”
In the meantime, the government is racking up a huge bill trying to keep life on an even keel in these uncertain times.