Stronger economy gives the Morrison Government a pre-Xmas boost

MYEFO paves way for possible early election in March 

Voters have received a sneak preview of next year’s election campaign with Treasurer Josh Frydenberg seizing on “incredible” jobs growth to boast about Australia’s economic performance. The release of the Mid-Year Economic and Fiscal Outlook in Canberra – usually a run-of-the-mill affair – took on additional importance on Thursday, laying the budgetary groundwork for a possible early election, in March 2022. 

Despite NSW posting a record 1,742 new COVID-19 cases, Mr Frydenberg talked Australia’s economic resilience and framed the election campaign around jobs security and cost of living. 

According to Treasury forecasts, one million new jobs will be created over the next four years with unemployment expected to fall to just above 4 percent by 2023. In November, a record 366,000 jobs were added, in what the Treasurer hailed as an “incredible” moment. 

The economy is expected to recover strongly from the worst jolt since the Great Depression with real GDP forecast to grow by 4.5 percent in 2021 and 4.25 per cent the following year. 

Appearing beside Finance Minister Simon Birmingham, the Treasurer talked up the importance of the Government’s “unprecedented” economic support for households and small business. The MYEFO confirmed the Liberal Party has all but abandoned its traditional focus on keeping a tight rein on debt-and-deficit. 

Wages growth forecast to rise 

With take-home pay forecast to rise by around $2,500 a year for average workers, the Government is hoping to blunt Labor’s expected attack on cost-of-living pressures.  

The economic update included a $16 billion election war-chest: spending that has been decided but not yet announced. This gives the Prime Minister an opportunity to call the election in late January – avoiding further parliamentary sittings. 

Covid may dampen the Xmas spirit  

MYEFO confirms the excessive cost of tackling the Delta variant with $25 billion in Commonwealth funding since the May Budget in COVID-19 support. 

Still, the Treasurer was upbeat when he fronted journalists. “No country is better placed (than Australia) to face the challenges presented by the pandemic. Consumers are spending, businesses are investing, and the jobs are coming back,” he said. 

Labor attacks Treasurer’s economic record  

The Opposition claimed the Government could not be trusted. “Don’t forget the Liberals have fallen short 52 of the 55 wages’ forecasts they’ve released during their near decade in office,” Labor’s Treasury spokesperson Jim Chalmers said.  

Business was generally positive. The AI Group said MYEFO provided further evidence of the “resilience” of the Australian economy. However, AI Group chief executive Innes Willox warned the labour market recovery will add to concerns about skills shortages. 

If you’d like to learn more, please contact Steve Lewis on steve.lewis@secnewgate.com.au

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