Budget $80bn better than tip
TREASURER Josh Frydenberg on Thursday handed down the final budget outcome, which was $80bn better than expected.
Mr Frydenberg said the budget deficit was $134.2bn in the 2020-21 financial year, a $27bn improvement on the most recent forecast given in May and $79.5bn better than flagged in October.
He conceded, however, that the final budget outcome did not take into account the impact the Delta variant has had on the economy.
“We recognise that since this final budget outcome, the economy has been hit by the Delta variant,” he said.
“But with the vaccination rates fast approaching the 70 and 80 per cent targets, restrictions will be eased, and what these numbers confirm is that when restrictions are eased, the Australian economy bounces back.”
Finance Minister Simon Birmingham acknowledged there would be some pressure on next year’s federal budget.
“These results underscore the reality that the best way for us to continue to secure stronger results for the budget bottom line is to continue to focus on having a stronger economy,” he said.
“These unexpected and unplanned additional (lockdown) payments, obviously, will place some pressure on the current budget.”
Mr Frydenberg credited the improvement to more people being in work and off government support.
“Since May of last year, more than 1 million new jobs have been created, and the unemployment rate has fallen below 5 per cent for the first time in a decade,” Mr Frydenberg said.
Net federal debt was $592.2bn – about 28.6 per cent of Australia’s gross domestic product – which was $25.3bn lower than forecast in May.
It comes as the government announced it had reached agreements with NSW, Victoria and the ACT to taper support for businesses in each jurisdiction as vaccination rates approached 80 per cent.
“It is consistent with the announcement that we made yesterday with respect to the Covid-19 Disaster Payment and aligned with the support measures that the government has put in place with the national plan that was agreed at national cabinet,” the Treasurer said.
Asked if the government should be ceasing support as case numbers increased, Mr Frydenberg reiterated that restrictions must be lifted in accordance with the national plan.
“Doherty modelling has said that there will need to be cases and indeed, there will continue tragically to be some deaths even as vaccination rates increased from 70 to 80 per cent,” he said.
“If it is not 80 per cent double dose vaccination rate, we bring to an end the Covid Disaster Payment and business support payment, when is it?”