Speaking to the ABC on Sunday, Prime Minister Scott Morrison revealed that the 6 October budget would include new measures which are going to be “pro-boosting aggregate demand in our economy”.
“What Treasury says is that we need to boost aggregate demand in our economy and the full suite of measures you have as a government need to do that job and that’s what the budget will do,” the PM said.
Questioned over the impact the paring back of JobKeeper will have on business, Mr Morrison said: “You don’t have to hold on to every measure forever.”
He, however, hinted that the budget will be business-focused, teasing the prospect of new measures that will pick up from where others, like JobKeeper, left off.
“We are transitioning JobKeeper — it’s important to do that. We always said it was not something that would be around forever. JobKeeper also finds its level where the need is greatest,” the PM said.
“There are other programs and the Treasurer will go into greater detail about that obviously in the budget which are dealing with the here and now, but rebuilding our economy and then building it for the future so we can go into a decade of prosperity,” he added.
Late last week, Treasurer Josh Frydenberg shared a similar message, announcing that the budget will aim to prevent the scarring effects of the COVID-induced recession.
Speaking to media, the Treasurer said: “Our focus is about getting unemployment down, and as you’ll see in the budget, which is the next stage in our JobMaker plan, it’s all about the economic recovery.”
There are several ways to do this, the Treasurer noted, but boosting aggregate demand and cutting red tape are among the most vital.
The government, he added, is set “to engage in getting more flexibility in our labour market, cutting red tape, focusing on skills, making it easier to do business”.
“That will be a real focus in our budget.”
Mr Frydenberg confirmed that tax cuts are on the cards, with the government set to lower the tax burden on all Australians.
But the government’s proposal to speed up income tax cuts isn’t receiving a warm reception, with critics arguing that they would not benefit the national economy as wealthier Aussies will bank the additional cash.
“The unfolding COVID pandemic is a stark reminder to all policymakers of two fundamental truths: that while many of us work and spend in economies, we all live and die in communities, and, secondly, the most vulnerable groups in those communities are always hit the hardest in major crises like this pandemic,” Reserve Bank governor Bernie Fraser said in a new advertising campaign.
Under the government’s legislated tax cuts, in 2022–23, it is due to increase the top threshold of the 19 per cent tax bracket from $41,000 to $45,000, while the top threshold for the 32.5 per cent tax bracket will be upped from $90,000 to $120,000.
A year later, in 2024–25, the plan is to reduce the 32.5 per cent tax rate to 30 per cent, more closely aligning the middle tax bracket with corporate tax rates. At this stage, 94 per cent of taxpayers are projected to face a marginal rate of 30 per cent or less.