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Australia budget places growth over fiscal discipline

Wednesday, May 19, 2021

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.

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