Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Treasury boss Steven Kennedy says Australia’s economic recovery has exceeded expectations and provides the chance to drive the unemployment rate below its pre-COVID 19 level.
Dr Kennedy said the early indications from the end of the JobKeeper wage subsidy in March suggest that while there have been job losses, many workers appear to have already found work, benefiting from the strength of the labour market.
Last week’s budget expects the jobless rate to be five per cent at the end of 2022 and 4.5 per cent in 2023/24.
It was 5.6 per cent in March.
“Our success in managing the crisis to date is enabling us to look forward to the next set of challenges at a time when others around the world remain focused on the immediate threat,” he told an Australian Business Economists’s lunch on Tuesday.
Meanwhile, Finance Minister Simon Birmingham is not expecting Australia to lose its top-tier AAA credit rating, even as last week’s big spending budget showed government debt hurtling towards $1 trillion.
The three main global rating agencies – Moody’s Investors Service, Standard & Poor’s, Fitch ratings – all rate Australia AAA, although the latter two have a negative outlook, which means it could be cut in the next two years.
Asked on Sky News whether it would be a failure for the government if the rating was cut, Senator Birmingham said: “We are not expecting that to happen.”
“The ratings agencies themselves issued their own statements, in their own words, last week in which they were very positive about the government’s strategy in this budget and the approach we are taking,” he said.
A credit rating downgrade would potentially raise the cost of borrowing for government, big business and banks in overseas markets, which in turn could be passed on to consumers.
But AMP Capital chief economist Shane Oliver thought it would mainly impact the “national psyche” rather than have a real economic impact.
Shadow treasurer Jim Chalmers believes the budget risks leaving too many people behind, even as the economy recovers.
He thinks that in a budget that included $100 billion in new spending, Australians doing it toughest were an afterthought.
“It’s not a recovery if we go back to the type of inequality and immobility which has characterised the Liberals’ eight long years in office,” Dr Chalmers told an event run by peak welfare group ACOSS.
Opposition Leader Anthony Albanese laid out in last week’s budget reply speech his $10 billion plan to build 30,000 social and affordable homes over five years through a Housing Australia Future Fund.
“After eight long years of this government, housing affordability has gotten worse and there are more homeless Australians than ever before,” Dr Chalmers said.
But Prime Minister Scott Morrison told reporters in Brisbane the government had been successful in its partnerships with the states and community organisations in delivering affordable housing.
“We invest a great deal when it comes to affordable and social housing initiatives,” he said.
He said Labor’s plan would get less value for taxpayers’ money.
In government, Labor would also pursue targeted support, or place-based initiatives, for disadvantaged communities.
“Recent studies, inquiries and reports, including important work by the Productivity Commission, have identified place-based solutions as an opportunity to change outcomes and get better bang for buck in social spending,” Dr Chalmers says.
It would also seek private capital from socially minded investors, otherwise known as impact investing.