Josh Frydenberg hasn’t totally given up on returning future budget surpluses, but for now his main aim is to drive the unemployment rate lower.
The treasurer’s third budget is still forecasting sizeable budget deficits over the next few years and a surplus is not projected in at least the next decade.
Asked on ABC radio whether he would still be in the parliament when the budget is back in surplus, Mr Frydenberg replied: “I’m not going anywhere.”
“But I can tell you that my number one goal has to prevent a generation of Australians going into long-term unemployment.”
The budget more or less spends the benefits of the economic rebound so far, based on an unexpected drop in the unemployment rate and the huge spike in the iron ore price bolstering revenues.
Billions of dollars will be spent on aged care, infrastructure, the NDIS and employment incentives such as additional childcare funding, as well as tax breaks for low and middle income earners and small business.
The treasurer defended another budget spend-up, saying Australia is still in the middle of a pandemic.
“We are recovering and recovering strongly … but at the same time we have to secure the recovery,” he said.
“Treasury have said the initiatives from this budget will create 250,000 jobs.”
But shadow treasurer Jim Chalmers says the government spent $100 billion in the budget and racked up $1 trillion in debt.
“I don’t think they’ve got a lot to show for it,” he told Sydney’s 2GB radio.
“You’d think … we’d have a much stronger economy at the end of it, but their own budget papers say that even after the four year budget period, real wages will have actually gone backwards.”
The budget forecasts show wage growth of 1.5 per cent in 2021/22 – lower than inflation at 1.75 per cent – and then running line-ball for the following two years.
“I think that’s an admission of failure,” Dr Chalmers said.
However, wage growth is predicted to be slightly over inflation in 2024/25 – 2.75 per cent compared with 2.5 per cent.
President of the Australian Council of Trade Unions Michele O’Neill agreed the budget fails to deliver on two key issues that matter to working Australians – insecure jobs and flat wages for years.
PwC chief economist Jeremy Thorpe described it as a “renovation budget” rather than a stimulatory one.
He said the improved economic environment means the government is in a much better place than it expected just six months ago but warned that fundamental reform could not be put off forever.
Ai Group chief executive Innes Willox saw it as the budget flicking the switch from emergency measures to the long term, which would continue to support growth.
“We need, for this budget to succeed, a credible plan to get our borders open,” he said.
“We’re in a little bit of a gilded cage at the moment here and the quicker we can get out of that and be interacting with the global community, the better.”