Melbourne recently hit the magic $1 million median. The return of migrant labour, flagged by Frydenburg last week, will further boost housing demand in 2022. Mortgage lending rates may never have been lower, but homebuyers are shouldering enormous debt burdens, even as wages flatline. Our house is a very, very, very fine house The $150,000 instant deduction for business investment stays another year (yes, Porsche sales rose in March 2021, in case you’re wondering), so now is the time to order that John Deere combine harvester you always wanted. Low and middle-income earners ($60,000 to $80,000) are the biggest winners, with $1080 in tax cuts for 2021-22, although everyone earning up to $125,000 will see some benefit. But that is precisely what this budget does. This week, Frydenberg hosed down expectations, telling the media not to expect a “big-spending” budget (under-promising and over-delivering is an age-old tactic). Treasurers always like to pull a rabbit out of their hat, and 2021 is no exception. Substantial assistance is also allocated to mental health. This is almost double pre-budget predictions. Very, very worried.Īged care is the centrepiece of this budget, delivering an additional $17.7 billion over four years, comprising 80,000 aged care places and more nursing assistance. It should make opposition parties worried.

Its big spending creates many winners and relatively few losers, successfully silencing critics. It targets specific demographics carefully, from families (childcare), senior citizens (aged care), first home buyers (housing subsidies and super redraws), young workers (apprenticeships), and beer drinkers (everyone). Make no mistake, this is an election budget through and through. The bottom line is that, ultimately, chastity will prevail – just not yet. The fiscal politics are unmistakable – this budget focuses on jobs and spending, rather than austerity and repair. The Treasurer gave no commitment on returning the budget to balance or surplus. Hey, big spenderĪ $161 billion deficit demonstrates the costs of the COVID economy, projected to fall to $99 billion in 2022-23. Moreover, growth is expected to return to trend from 2022-26 (2.25-2.5%) on the back of much lower iron ore prices of $US55/tonne as soon as March 2022.

Healthy, but that assumes there are no more shocks over the next 12 months. In October 2020, Treasurer Josh Frydenberg predicted GDP growth of 4.75% for 2021-22. Will consumers open their wallets, book a (local) holiday, kick off a reno, or start a new build? The government certainly hopes so. Moreover, Australians boosted household savings at a record rate in 2020, banking $130 billion, raising total deposits to more than $1.1 trillion. COVID-19 measures drove the 2020-21 budget into a $213 billion deficit, but strong minerals prices (despite coal’s fall) should improve the bottom line by $30 billion-plus. Australia’s iron ore exports reached $AU116 billion in 2020, with Chinese imports exceeding 2019 totals, despite considerable bilateral trade friction.įederal revenue growth from resources exports means budget repair should be more rapid.

It’s hard to believe iron ore prices were “only” $US80/tonne in April 2020. Prices exceeded $US200 per tonne last week, driven by global demand and lower Brazilian output due to COVID-19. How do we pay for all this largesse? Thank the sugar hit from iron ore. Read more: Treasurer Josh Frydenberg’ federal budget speech 2021-22 Is this a “ women’s budget”? A “Labor budget”? Or maybe even an election budget?

Federal budget 2021