Ahh, it’s that time of the year again – and I don’t mean Christmas. It’s Federal Budget time. The Federal Budget that was announced on Tuesday has been labelled as ‘business-focused’, introducing a bulk of tax cuts, asset write-offs and employment incentives. Some key elements of Josh Frydenberg’s announcement included a further $98 billion in pandemic-related health measures and stimulus packages and $17.8 billion plan to provide tax cuts to over 10 million workers.
Further, the budget’s substantial expansion to the Instant Asset Write-off Scheme now allows an estimated 3.5 million businesses to immediately deduct the full value of any business-related asset with no imposed price limit. NAB chief executive Ross McEwan celebrates this initiative as a way to incentivise businesses to dish out on new equipment and skilled employment and stimulate our economic recovery.
Sick and tired of hearing about rising unemployment rates every week? Well, the Federal Budget has also been described by its maker as “all about jobs”. With the introduction of the JobMaker hiring credit, it’s hoped that businesses will increasingly employ younger workers, animated by a $200 weekly subsidy for every new employee hired aged 16 to 29 that had previously been on JobSeeker. Another win for young people is embodied in the government’s $1.2 billion pledge to cover half the wages of at least 100,000 apprenticeships and traineeships. Despite these celebrations, the RBA has continued to remain sensitive to high rates of unemployment, with many analysts postulating the potential for a record low 0.1 percent interest rate in the near future.
But woah, woah, what about everyone else? Frydenberg announced a $240 million “women’s economic security” package that aims to encourage more women to seek employment in currently male-dominated industries. Despite this pledge, a paucity of finances have been allocated to helping women find suitable jobs now, rather than incentivising women to move into STEM and construction in the future.
The budget also faced considerable backlash for the lack of injections into social housing and aged care. This was despite the Royal Commission into Aged Care Quality and Safety calling for increased spending to lift the standard of living and implement a reliable funding plan earlier last week. Although Aged Care Minister Richard Colbeck had previously promised an immediate funding package of $40.6 million, the Federal Budget has not yet acted to expand this funding in response to the Royal Commission’s recommendations.
Turning now to the ASX200, the celebrations following the announcement of the Federal Budget were reflected in a strong end to a five-day high. Reaching a close of 6102.2 on Friday afternoon after a gain of 5.4 per cent throughout the week, the rejuvenated market has been attributed to the boosted sentiment of investors in response to the announcement of new stimulus packages. Similarly, the increases seen in consumer stocks and banks can be explained by fresh consumer confidence motivated by the Federal Budget’s promise of fast-tracked personal tax cuts. While oil and energy sectors surged a collective 0.7 percent, mining and materials suffered losses along with the Commonwealth Bank and NAB that fell 0.6 percent and 0.4 percent respectively.