Federal Treasurer Josh Frydenberg has signalled the Morrison government has no intention of delivering a slash and burn austerity budget, with the focus on reducing unemployment to below 5, of possibly 4 per cent, as part of the post-pandemic recovery.
In a major pre-budget speech in Canberra, Mr Frydenberg said next month's budget was "another pandemic budget" which would feature spending measures to focus on job creation, not deep cuts to rein in Australia's extraordinary level of deficit.
Make no doubt, the cuts are coming, but not yet.
"Looking further ahead, our challenge, once we recover from this crisis, is to, again, rebuild our fiscal buffers. We have done it before and we will do it again," told the Chamber of Commerce and Industry.
"But it will not be by undertaking any sharp pivots towards austerity.
"For fiscal consolidation should be sustainable, it should rely on gradual changes that are made over time and that provided the foundation for a growing, thriving economy."
Josh Frydenberg spoke of the "unusual and uncertain times" that the world was in as it dealt with COVID-19, but talked up the resilience of Australia's economy saying "beyond all expectations" employment has "not only returned to its pre-COVID level, it has surpassed it."
Australia's unemployment rate for March was 5.6 per cent seasonally adjusted. This represents for the Treasurer, "more Australians in work today than ever before," but he says the job is not done.
He stated, "We need to stick to the plan."
But, the pandemic impact over the past 18 months has already changed the Morrison government's position on debt and economic support. It has delivered $250 billion in direct economic support including major measures such as the $90 billion JobKeeper payment scheme in a bid to keep people employed and the economy afloat. JobKeeper has ended, but the government is now flagging this is no time to tighten belts.
The Treasurer says Australia's economic recovery must be secured.
"We remain firmly in the first phase of our economic and fiscal strategy,"Mr Frydenberg said on Thursday.
"We need to continue to work hard to drive the unemployment rate lower. That is what the budget in just under two weeks' time will do."
"A lower unemployment rate will now be required to see inflation and wages accelerate. In effect, both the RBA and Treasury best estimate will now need to have a four in front of it to deliver this outcome. We want more people in jobs and we want people in better paying jobs."
The Treasurer has flagged measures in this year's budget in the area of skills, infrastructure, tax, energy, the digital economy and deregulation.
It was not in Thursday's speech, but a major multi-billion dollar package to address women's economic security and personal safety is expected in the May budget, including changes to childcare and superannuation.
Labor's Treasury spokesmanJim Chalmers agrees it is no time for austerity, but he warns cuts are coming.
"All this speech does is push budget nasties from this side of the election to the other side of the election," he told reporters on Thursday.
"There will still be deep and damaging cuts to the budget from this coalition government, but the Australian people will not know what they are until we get through the election, and that is a risk to people who do not know where those cuts will be coming from.
He said he is not seeing any plan to deliver full employment.
"(Frydenberg) thinks he can spend his way to full employment knowing what we really need in the budget is a plan to achieve it," Mr Chalmers said.
"This speech, once again, is all about politics and not economics."
The federal budget will be delivered on Tuesday May 11.
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