While an abrupt turn to austerity was avoided in this budget, overall program spending is nevertheless declining substantially: falling $60 billion this year (or around 3% of Australia’s GDP) as COVID support programs are eliminated. And the new investments announced in some programs neither offset the contractionary impact of overall spending cuts, nor come close to meeting the real need for expanded services in any of these areas.
Our briefing paper on the 2021-22 Commonwealth Budget describes the contradictory macroeconomic logic of the budget, and the risks of an economic recovery that is overwhelmingly dependent on consumer spending – at a time when consumer incomes are constrained by stagnant wages and cutbacks in income programs. It also reviews specific spending announcements in several key areas of relevance to workers and labour markets: including aged care, gender inequality, superannuation, manufacturing, and higher education.
This budget was an opportunity for the government to recognise that a sustained recovery needs a balanced and inclusive economic and fiscal approach. Full recovery can only be underpinned by a commitment to more secure jobs, higher wages, expanded public services, and a broad portfolio of high-value industries. Sadly, the budget fails to deliver on all these counts. The government has not truly accepted its responsibility to oversee a lasting and inclusive reconstruction after the terrible events of the last year.
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