Initiatives have been announced in sectors such as manufacturing, banking and tourism. Will they work?
Tuesday’s federal budget is expected to contain the largest deficit in decades – more than $200bn – and many big-ticket items to boost growth, including tax cuts, incentives for hiring and investment, and infrastructure spending.
The government has already announced a series of initiatives that in any other year, outside the Covid-19 recession, might be bigger news.
We’ve looked back at the flurry of announcements to see how the ideas landed and whether or not the Labor opposition and independent experts think they’ll be effective.
What? An extra $1.5bn for manufacturing, including a $1.3bn fund for grants to companies that co-invest to boost production in six priority areas (resources technology and minerals processing; food and beverage; medical products; recycling and clean energy; defence; and space).
Why? To improve self-sufficiency because global shocks such as Covid-19 interrupt global supply chains, and to create jobs in the manufacturing sector.
Will it work? Simon Ringer, a professor of materials science at the University of Sydney, backs the policy, saying “to do nothing here is just not an option”.
“Considering the long-term large-scale bipartisan government sponsored support for manufacturing by our major trading partners such as Japan, Europe and the US, it makes perfect sense that an Australian government would be jumping in, driving an initiative like this,” he said.
“It’s impossible to imagine a thriving export-oriented advanced manufacturing sector and the national government is nowhere involved.”
What? A $3.5bn upgrade to the national broadband network, including to take fibre deeper into neighbourhoods serviced by fibre to the node (FTTN) technology.
Why? Although the commitment falls short of fibre to the premises, the closer the NBN gets to households, the better internet speeds they will get and the more competitive the network will be with 5G.
What Labor says? Anthony Albanese said the Coalition had missed “the economic reform opportunity of a lifetime by trashing the former Labor government’s fibre-to-the-premises NBN” but had now “finally admitted they got it wrong”.
Will it work? Experts such as independent telecommunications analyst Paul Budde have welcomed the move – the reaction has largely been one of better late than never.
What? Remove the 47% fringe benefits tax on retraining provided by employers to redundant, or soon to be redundant, employees.
Why? Remove disincentive for employers to provide or pay for training.
More to come? The government has said it will also consult on allowing workers to deduct education and training expenses that are not directly connected to their current jobs.
Will it work? Tanya Ross Jones, partner of people advisory services at Ernst & Young, said the fringe benefits tax (FBT) is a “real disincentive to employers”.
Ross Jones said retraining could “easily cost several thousand dollars per employee” and “essentially doubling the cost” through FBT makes it less likely companies will do something “to ease the pain of making people redundant”.
“This measure should certainly spur some action, we certainly see as a positive thing.”
What? An extra $250m consisting of: $200m for a fifth round of Building Better Regions grants, of which $100m will be for regional tourism infrastructure; and $50m to assist businesses in regions heavily reliant on international tourism.
Why? In March, the Coalition announced a $1bn relief and recovery fund, with tourism listed as one of its principal purposes. Although some funding went to major attractions such as the Great Barrier Reef and zoo animals, the rest went to purposes including seafood industry, forestry, airlines, airports and air freight.
In August, Margy Osmond, the chief executive of the Tourism and Transport Forum, told the Senate Covid-19 inquiry there was “considerable concern” and it was an “ongoing bone of contention that it was not spent extensively in the industry”.
This measure is best viewed as a top-up to help tourism operators, who have been hard hit by the ban on international travel.
What? Remove the “sub-quota” mandating a minimum of Australian children’s content on television while retaining the overall quota for 55% Australian content (drama, children’s content, or documentary).
Provide $53m for the development and production of local film and television, including $30m to Screen Australia and $20m to the Australian Children’s Television Foundation, both over two years. Increase producer offset to 30% for all domestic TV and film production.
Why? Create incentives to commission bigger-budget drama, which is more likely to be sold globally rather than only be seen in Australia.
What Labor says? “The Morrison government’s changes to content quotas will mean fewer Australian stories on our television screens and fewer job opportunities for local creators,” Tony Burke and Michelle Rowland said.
“For commercial TV, children’s content obligations are watered down. For Foxtel, content obligations has been halved. For streaming providers, there remains no obligation at all.”
What? Allow credit providers to rely on what they’re told by borrowers unless there are reasonable grounds to suspect the information they are providing is unreliable.
Why? Improve the flow of credit by counteracting an atmosphere of excessive risk aversion among lenders.
What Labor says? The shadow treasurer, Jim Chalmers, has said: “I do understand that people want to see finance flowing freely in the economy … but I’m really concerned about people getting caught in debt traps. I’m worried about people getting in over their head. I’m worried about going against the recommendations of the royal commission.”
Will it work? The measure was panned by consumer groups on the basis it will enable a return to the kind of misbehaviour that sparked the Hayne royal commission.
Canstar group executive of financial services, Steve Mickenbecker, told Domain easing requirements for lenders to assess borrowers’ expenses could see an average buyer able to borrow $70,000 more towards the cost of a home.
What? Expand the seasonal worker program and increase incentives for young Australians and jobseekers to pick fruit. That could include increasing the amount jobseekers can earn before income decreases their welfare payments – although more detail is needed on budget night.
Why? Australia’s working holiday visa scheme allows an extension of time for tourists who do a rural stint but because of the ban on international travel there’s not enough people to pick fruit. Despite an effective unemployment rate of 9.3% in Australia, there are 26,000 fruit-picking jobs to be filled.
What Labor says? Labor’s Amanda Rishworth has said the government has “done nothing to address” the structural challenge for many years.
She took aim at the deputy prime minister, Michael McCormack, suggesting people go to the regions to find love or take photos for Instagram, as comments that “ignore the challenges around housing and the ability to find a place to stay, transport, a range of different, really important logistical issues that so far governments haven’t actually found the solution to”.
Will it work? It will depend how large the incentives are.
The Australian Council of Social Services chief executive, Cassandra Goldie, said: “People on low incomes face insurmountable challenges in relocating for jobs – where people have family supports and have found affordable housing, which is incredibly hard to come by.”
“They can’t give this up for a couple of months work with the prospect of returning to homelessness.”
Goldie noted cases of people being overcharged for accommodation and being paid less than the minimum wage for farm work – both legally where piece-work rates apply, and unlawfully where the work is poorly regulated.
“People should be paid at least at the minimum wage, not be forced into expensive accommodation, and the work should be better regulated.”
