Australia’s “red-hot” economic recovery is going to make for a 2021 Federal budget that is way better than initially expected, business consultancy Deloitte has predicted.
Indeed, it says the backdrop for the upcoming budget on 11 May is now “pretty good” and, although the economy remains under a lot of pressure, that pressure is much less than the official forecasts had factored in.
The latest Deloitte Access Economics report released today (Monday), says it still seems to come as a surprise to many that “Australia’s world-class defence against the virus has us near the front of that pack; that Australian living standards grew faster than their decade-average through 2020; [and] that we are the first – and so far only – advanced nation to have more jobs now than before the pandemic”.
Ending JobKeeper will have limited impact
Overall job-creation momentum, the report adds, is set to be only temporarily disrupted by the end to the JobKeeper program.
Deloitte says three things stand out as helping to create a good backdrop for Treasurer Josh Frydenberg’s 2021-22 Federal Budget.
The first of these is that jobs have returned much faster than Treasury assumed. “That’s even more central to the economic outlook than usual, because Covid’s economic pain has centred on jobs,” the report’s authors note.
“Second, the world is giving us a much larger pay rise than Treasury forecast – iron ore prices are as high as Nimbin on a sunny Sunday and other export prices are looking healthier too.”
Families are spending more than expected
The third is that Australian families have been happier to open their purses and wallets than Treasury had forecast.
“Compared with Treasury’s latest forecasts, national income is set to be 1.6% ($31-billion) stronger in 2020-21, rising to 4.2% ($85-billion) in 2021-22, 4.9% ($102-billion) in 2022-23, and a mighty 5.2% (or $114-billion) better in 2023-24,” the report states.
“That drives beautiful momentum across all the key drivers of the tax take – jobs, profits and spending.”