Scott Morrison says 2020 budget's spending plans will go ahead even if forecasts prove wrong
Scott Morrison has declared the government will deliver all the big-spending elements of Tuesday night’s budget even if the rosy assumptions underpinning the economic statement turn out to be wrong.
As the government embarked on the traditional media blitz to sell the budget, the Labor leader, Anthony Albanese, was preparing to use Thursday night’s budget reply speech to outline elements of new childcare policy and a commitment on energy.
The prime minister told 2GB on Wednesday the debate that had ensued post-budget about whether the underpinning assumptions were credible was “overstated”.
As well as a turbo-charged economic growth forecast for 2021, Tuesday night’s budget assumes that a Covid-19 vaccine will be widely available by the end of next year.
Morrison said every budget contained assumptions. “But those assumptions don’t determine whether you get a tax cut, they don’t determine whether the Dunheved road upgrade is going to be done, or many other infrastructure projects – all of those things are not dependent on a vaccine being there or not.”
The prime minister said all the budget measures – $17.8bn worth of income tax cuts, business investment incentives that cost the budget over $26bn, a hiring credit that cost $4bn – would all go ahead regardless of whether or not the assumptions, which inform the budget bottomline, ultimately came to pass.
Labor has declared Tuesday night’s budget a missed opportunity, but the opposition will pass the income tax cuts, and is highly likely to support the business incentives, even though there is concern in the opposition about the substantial cost of the concessions.
Guardian Australia revealed on Wednesday that Labor had written to the Australian Taxation Office pledging support for the government’s plan to try to expedite proceedings.
But not all the tax cuts will be available to people immediately. Delivering the change, which requires a change to withholding schedules, will take between six and eight weeks. But the cuts from the extension of the low- and middle-income tax offset, and the backdating of tax cuts to July, will not be paid until the end of the year.
The government introduced an omnibus bill on Wednesday wrapping the income tax measures and the business concessions together, and the Australian Taxation Office issued a statement saying it would roll out the changes “as soon as possible after bipartisan support has been confirmed” for the omnibus legislation.
The Greens leader, Adam Bandt, wrote to the tax commissioner on Wednesday saying the Greens did not support bringing forward the stage-two tax cuts because “they overwhelmingly benefit the wealthy and the so-called tax cuts for low and middle income earners only last for one year”.
During parliamentary debate, the Greens plan to move amendments to stop tax cuts flowing to anyone earning more than $1m a year.
As well as shrugging off the debate about the credibility of the budget assumptions, the government has also had to defend the design of its wage subsidy scheme, which limits support to workers under the age of 35.
The treasurer, Josh Frydenberg, told the National Press Club the government had targeted youth unemployment because young Australians had been hard hit during the recession triggered by the Covid-19 pandemic.
Asked what safeguards there were to stop employers sacking a 50-year-old worker and hiring three part-time workers who would get their wages subsidised through the program, Frydenberg said the scheme required employers to comply with a “double-barrelled test”. Businesses had to demonstrate that payroll was higher and that the jobs were additional to the business.
But the treasurer’s answer leaves open the prospect that employers could let go older workers and substitute them with younger employees on subsidised wages and still remain within the rules of the program.
While Labor is likely to support the measure, the shadow treasurer, Jim Chalmers, said: “It beggars belief … when you’ve got a trillion dollars in debt, you’ve got all of this money being sprayed around, that not just older workers but workers in their 30s, workers with young families, are being left out and left behind and left in the lurch”.
The ACTU said the program, which replaces the income support currently provided by the jobkeeper wage subsidy at a lower rate, would provide incentives for employers to pursue part-time and casual employment. The ACTU also criticised the lack of support for older workers, who often struggle to find re-employment if they lose their jobs during a downturn.
Labor blasted the government for not doing enough to support women, who, like young people, were hard hit by the economic shock associated with the pandemic.
During question time in parliament, Albanese asked Morrison why the government was “racking up $1 trillion of debt without a plan to support the participation of women in the workforce”.
Morrison blasted back, saying it may come as a surprise to Albanese “but women run small businesses … women pay tax, women hire other Australians in their businesses … women want to drive on safe roads”.
The prime minister said women wanted “to go to university, and they want to study science and technology and engineering and maths … they want to get apprenticeships … they want to get traineeships, they want to get jobs”.
“But this budget, above all, is a budget for all Australians.”