What Does The 2020-21 Federal Budget Mean For You?
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What Does The 2020-21 Federal Budget Mean For You?

Suzi O'Shea

Suzi O'Shea

26/03/2021 • 6 minute read

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You know the federal budget is going to be a big deal when the Prime Minister, Scott Morrison, declares it to be, “one of the most, if not the most, important budget since the Second World War”.Ordinarily, most people don’t pay too much attention to the federal budget, but 2020 has been anything but ordinary. The deadliest virus of our lifetime has seen the global economy decline at an extraordinarily rapid rate. Shutdowns and border restrictions have seen entire industries crash or on the brink of collapse. Governments all around the world have been put to the test to see how they would handle such a crisis. With the Reserve Bank of Australia freezing interest rates and the federal budget being passed down, it’s fair to say, it’s a big day in finance.

When the proceedings kicked off, it didn’t bode well. The treasurer addressed the nation with this grim, but not surprising news:

“COVID-19 will see our deficit reach $213.7 billion this year, falling to $66.9 billion by 2023-24. Net debt will increase to $703 billion or 36 per cent of GDP this year and peak at $966 billion or 44 per cent of GDP in June 2024,” Mr Frydenberg says.

The federal budget 2020-21 shows the impact this pandemic has had on our economy, as well as give an indication of how the nation will recover from it. What we are also seeing is a shift of reliance from international trade, to a boost in domestic trade and infrastructure. Let’s break this down and see what this all means.

Millennials Rejoice

Younger people have often been overlooked in budgets and most governmental planning. So it came as a very pleasant surprise to see the “Job Maker Hiring Credit” scheme announced. The scheme will introduce a subsidy to employers who hire unemployed people under the age of 35. If an employer takes on a new staff member that has been on Job Seeker, Youth Allowance or the Parenting Payment in the past month, the incentive for the business is as follows:

  • employee aged 16-29 = $200 a week for 12 months
  • employee aged 30-35 = $100 a week for 12 months

This gives employers in any business a significant incentive to employ younger Australians. Australians in this age group were hit hard during the pandemic and this is a much-needed boost to help youth unemployment.

There have also been changes to private health. For those of you still living at home under your parents’ private health fund, the age of dependants has been increased from 24 to 31.

As part of an unprecedented $5.7 billion spend on mental health, the federal budget also provides assistance in the way of added psychology sessions.  If COVID has messed with your head, the Medicare subsidised psychology sessions have doubled to 20 sessions in a year. If you or someone you know is struggling and needs immediate attention, please contact Lifeline on 13 11 14.

Tax Cuts & Consumer Spending

Economists and politicians alike can agree that consumer spending equals a healthy economy. The government lining our pockets with some extra cash in the form of tax cuts in this federal budget is an attempt to get us spending again.


source: tradingeconomics.com

Australians earning $45,000 – $90,000 would have noticed a cool $1080 bonus at tax time, way back in July. That same bonus, the Low and Middle-Income Tax Offset (LMITO) will be made again this year. The tax brackets will also be bumped up. The 19% tax bracket threshold will increase from $37,000 to  $45,000 and the 32.5% tax bracket threshold will increase from $90,000 to $120,000. This means the tax man gets less of your hard-earned salary, giving you some reprieve.

The next time you’re riddled with guilt over a decadent purchase, just think,  you’re doing your part to help your nation recover from recession… treat yourself. You’re a national hero.

Wage Support & Apprenticeship

Depending on which political party you ask, it’s the fault of the opposition that the number of new apprenticeships has rapidly declined. Matthew Elmas of the Smart Company writes,

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According to National Australian Apprenticeship Association (NAAA) figures, the number of new apprentices fell 20% from March to June, meaning about 12,000 people were either stood down, suspended or cancelled their apprenticeships amid the coronavirus crisis.

The NAAA figures show Australia is approaching the lowest level of apprentice commencements since the late-1990s.

In a bid to curb this trend, the government has announced an injection of $1.2 billion in the federal budget. The government scheme will set out to pay half the wages of an apprentice in any industry across any company, regardless of its size, until the cap of 100,000 apprentices is reached. This will give a much-needed boost for apprentice retention and the creation of new jobs, especially for young people. Had the urge to upskill your culinary prowess? Now’s the time to pursue an apprenticeship that will see you on your way to a new career.

Local Industry & Infrastructure

The government is placing a huge emphasis on local industry across the country and this is reflected in the federal budget. This helps to sever the reliance of international trade that Australia has always depended on, while also providing local jobs, which in turn increases confidence in consumer spending. The prime minister says,

“We have been working closely with state and territory governments to invest in the infrastructure that is ready to go and can help rebuild our economy and create more jobs,” he said.

“This investment through Tuesday’s budget will boost the national economy and support an estimated 30,000 direct and indirect jobs across the nation.”

 

Key investments across the country include:

  • $560 million for the Singleton bypass on the New England Highway in NSW
  • $528 million for the Shepparton and Warrnambool rail line upgrades in Victoria
  • $750 million for Stage 1 of the Coomera Connector (Coomera to Nerang) in Queensland;
  • $88 million for the Reid Highway interchange with West Swan Road in Western Australia;
  • $200 million for the Hahndorf Township improvements and access upgrade in South Australia;
  • $150 million for the Midway Point Causeway (including McGees Bridge) and Sorell Causeway as part of the Hobart to Sorell Roads of strategic importance corridor in Tasmania;
  • $120 million to upgrade the Carpentaria Highway in the Northern Territory
  • $88 million for the Molonglo River bridge in the ACT

The federal budget is looking to commit $7.5 billion in new projects across the country. While this may seem promising, it has been suggested that these “new” projects are simply rehashed announcements of projects that were unveiled in last years budget.

An economist that contributed to the Reserve Bank of Australia’s internal report, Matt Larkin, wrote that many of them questioned the so-called “new projects” saying they were simply re-announcements of earlier mooted deals. In a report titled, Shovel Ready, Set, Go? Mr Larkin commented:

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“While the three programs represent an intention to support infrastructure activity in the near term, liaison contacts and industry experts are sceptical that shovel ready projects are as new as governments and the media have portrayed them.”

That said, whether the projects are a month old or a year old if they come good on their promise, it will be a benefit to our local economy.

Time will tell if these measures are enough to get us back on the road to recovery. In the next coming weeks, businesses will have more confidence and an added incentive to hire young people. We want to hear your thoughts on this budget and how you this impacts you. Let us know, comment below and share this article with your friends.


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Suzi O'Shea

Written by Suzi O'Shea

Suzi O'Shea is a contributing writer for Oiyo. She has a Bachelor of Arts, Communications with honours from Southern Cross University. Suzi has worked in media for over 15 years and has been published in several online publications as well as print magazines. She has worked as a freelance writer, speaker, and change management facilitator.

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