Australia budget places growth over fiscal discipline

Significance

The strategy should support the economic recovery that is already underway following a year of pandemic-related restrictions. There will be more spending on infrastructure and additional tax relief for businesses and workers, with the result that public debt will remain high for at least a decade.

Impacts

• The skills shortage affecting business investment is likely to continue until international travel and migration normalise in 2022.
• Australia will hold onto its AAA credit rating despite the growing debt load, but the outlook has become more negative.
• The coalition’s expanded social agenda will weaken the opposition Labor Party ahead of the pending general election.