The treasurer has released the 2021-22 Mid-Year Economic and Fiscal Outlook (MYEFO), saying the Australian economy is poised for strong growth given the nation’s high vaccination coverage and support policies for households and small businesses.
In a statement on Thursday, Josh Frydenberg said that during the COVID-19 pandemic Australia had performed more strongly than any major advanced economy.
“Consistent with the strong economic recovery, the unemployment rate is forecast to reach 4¼% in the June quarter of 2023,” Frydenberg said.
“This would represent the first time since before the Global Financial Crisis that Australia has sustained an unemployment rate of below 5% and only the second time since the early 1970s.”
Today, Australia saw very strong job numbers, with a record number of people in work & 366k jobs created in Nov.
We are still in the middle of the pandemic, & there are challenges ahead, but our Economic Plan is working & Australians can look to the New Year with confidence. pic.twitter.com/hSpEP5IBim
— Josh Frydenberg (@JoshFrydenberg) December 16, 2021
Among the successful government policies the treasurer credited with boosting the national economy were more than $7.3 billion in business support payments, $12.6 billion in disaster payments for eligible individuals, and additional funding to boost the vaccine rollout and hospitals.
Additional federal support money for key sectors impacted by the pandemic, such as the aviation, tourism, early childhood education and care sectors, as well as the arts, have played a role in the positive economic news.
“Australia has a proven record of dealing with COVID‑19 and the government remains focused on securing the recovery, guaranteeing our essential services and setting Australia up for the future,” Frydenberg said.
The MYEFO forecasts that despite the negative impacts of lockdowns that were imposed by state and territory governments as a result of outbreaks of the COVID delta variant, the budget balance in 2021 is improved. This also resulted in an improved outlook for Australia’s debt, with gross debt projections expected to be lower in every year of the forward estimates and medium term compared to the last budget.
“The underlying cash balance in 2021‑22 is expected to be a deficit of $99.2 billion (4.5% of GDP), a $7.4 billion improvement since the 2021‑22 budget. And $2.3 billion stronger across the forwards,” the treasurer said.
“This significant improvement in the underlying cash balance occurs at the same time that tax receipts as a share of GDP are forecast to fall from 22.9% in 2020‑21 to 22.1% in 2024‑25 due, in part, to the government’s tax reform measures that continue to grow the economy and deliver a stronger budget.”
The ongoing pandemic will challenge domestic and global recovery ‘for some time to come’, the treasurer added, announcing additional funding in the MYEFO to continue growth in the economy.
Additional money has been set aside for the National Disability Insurance Scheme (NDIS), with $2.7 billion in 2021-22 and $26.4 billion over the four years to 2024‑25.
Another $2.3 million has also been committed to new and existing infrastructure projects, $500 million of that going to projects in rural and regional Australia.
The federal government has also announced a further $1.1 billion for Aboriginal and Torres Strait Islander people in the areas of health, education, early childhood, justice, languages and family support.
Over 10 years, the government will provide another $1.1 billion to secure a reliable energy supply and a ‘technology-driven approach to emissions reduction’ as part of its roadmap to net zero by 2050.
During a press conference, Frydenberg and finance minister Simon Birmingham also pointed to Australia’s AAA credit rating from three leading rating agencies (one of only nine countries to do so) as proof of the economy’s strong position. But Australia’s net debt is forecast to increase to $914.8 billion by 2024-25 (only slightly less than what was forecast in the budget).
“There is also a material improvement in the net debt position which now peaks at 37.4% of GDP as opposed to 40.9% in 2024‑25, $65.7 billion lower than what was expected in May,” the treasurer said.