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5 things you need to know about the federal budget
12 May 2021
University of Sydney experts respond to the 2021-22 federal budget
From aged care and mental health to childcare and superannuation, experts from the University of Sydney respond to key announcements in the 2021-2022 federal budget.
Last night Treasurer Josh Frydenberg delivered the 2021-22 budget, announcing that the economy is "roarding back to life" with investments in aged care, childcare and mental health.
But key budget numbers suggest a "more muted economic recovery", according to Dr Gareth Bryant.
"The Treasurer is right to abandon the surplus fetish and prioritise reducing unemployment. But budgets should be judged according to real outcomes," Dr Bryant, political economist from the Department of Policy Economy explained.
Dr Bryant joins other experts from the University of Sydney to explain what the federal budget might mean for jobs, women, aged care, mental health and transport.
1. Jobs & migration
The federal government estimated that the unemployment rate will fall to record lows over the next few years.
Yet "by its own forecasts, the government is not doing enough to create the good quality jobs needed to lift real wages," Dr Bryant said.
This is a sentiment echoed by Associate Professor Angela Knox, an expert in industrial relations from the University of Sydney Business School.
"While the budget predicts an unemployment rate below 4.75 percent by mid-2023, we need to look beyond the numbers, to the quality of these jobs to understand the full picture," Associate Professor Knox explained.
“The government continues to have its foot on the brake when it comes to addressing the underemployment and job insecurity that plagues Australia. We need to create good stable jobs capable of stimulating productivity, innovation and economic growth."
Associate Professor Anna Boucher, a global migration expert, says migration could fill current employment gaps - yet the budget didn't address this.
“There are assumptions that migration will not return until mid-2022, with simultaneous calls for investment in ageing, tourism, childcare and skilled labour," she said. "Some of the growth in these areas needs to be realised through migration, and not only the skilled kind. Aged care and tourism use a mix of low, semi-skilled, and skilled labour, for instance."
Improved hotel quarantine infrastructure and more incentives for international students to return to Australia are potential mechianisms for increasing migration flow, Associate Professor Boucher says.
2. Women
Childcare was a big part of the budget, with the Treasurer announcing a $1.7b funding boost over three years to boost the top childcare subsidy.
Deputy Director of the Women & Work Research Group, Dr Meraiah Foley, said: "It is well established that childcare costs act as a brake on women's workforce participation in Australia. As women work more hours, they incur higher effective marginal tax rates while their access to government benefits declines, effectively creating a financial disincentive to work.
"Although it is heartening to see new investments in childcare, the system remains overly complex and still leaves many families shouldering steep costs.”
Changes to superannuation coverage are also a win for women, said Professor Susan Thorp, a leading expert in finance and superannuation.
"Women with multiple casual or part time jobs could receive better superannuation coverage when the $450 per month minimum earnings threshold is removed.
"The budget did not introduce Superannuation Guarantee contributions for people on paid parental leave. This is another measure that could help fill the gaps in retirement savings experienced by parents and carers."
3. Aged care
The federal government also announced an additional $17.7b for Australia's aged care system. Professor Lee-Fay Low cautioned it is still unclear whether critical structural reforms suggested by the Royal Commission will be undertaken.
“I worry that this is pouring funds into patching up roads rather than building a better transport system," Professor Low from the Faculty of Medicine and Health said.
“The government is spending $6.5b for 80,000 new home care packages, and $7.8b to improve the quality of residential aged care including an $10 additional funding per day per resident, so more older people will get the home care they need.
“The impact of funding an additional less than half-an-hour-per-day of personal care worker time per resident is less clear, hopefully it will mean better care. The devil will be in the implementation details.”
4. Mental health
Dr Sebastian Rosenberg, an expert in mental health policy, was part of the team from the Brain and Mind Centre who estimated that the mental health sector would need around $1b each year to meet the needs of the community.
“This budget provides around half this, an improvement on recent more meagre years. The budget also focuses on the development of regional and digital solutions, using new centres and services.
"A national and universal aftercare service, following an attempted suicide is both sensible and welcome. How all these models evolve needs close scrutiny. A full government response to the Productivity Commission is yet to emerge. While the scale of the investment is not optimal, the overall directions and key themes are to be supported."
5. Transport
“The expected delay in reopening borders means that the transport sector will not find the ‘new normal’ until 2023. We won’t see a full recovery for our public transport networks until overseas tourists and international students return," Dr Geoffrey Clifton from the Institute of Transport & Logistics Studies said.
"This will be particularly hard on the small businesses that run tourist bus and coach services and the rural and regional areas that rely on this business. It is good to see that the government is supporting domestic tourism in the meantime.
“Over the longer-term, Australian governments will continue to reassess transport infrastructure priorities with more Australians working from home but the budget largely leaves that to the states and territories.”