Budget 2021: What does it mean for Australia?

9 June 2021

This forum will focus on reactions to the 2021 Commonwealth Budget from both a macroeconomics and microeconomics perspective. This past year involved lots of spending and many twists and turns as we combated the pandemic and economic fallout resulting from measures such as lockdowns, social distancing, and closed borders. As we move forward in 2021 and beyond, does the budget reflect what Australia needs now and will it enable sufficient growth and policy innovation for a sustainable future?  

Professor Guay Lim, Professorial Fellow, Melbourne Institute: Applied Economic & Social Research, the University of Melbourne

Is the Budget on track to promote inclusive growth?
The presentation will consider the macroeconomic forecasts and the risks associated with the projected paths of GDP growth, employment, the unemployment rate, price inflation, and growth in wages.  Is the projected ”new normal” the same as the ”old normal”?  When and should the fiscal strategy change from a short-term focus on stimulating the economy to a medium-term objective of stabilising and reducing debt? 

Ms Danielle Wood, Chief Executive Officer, Grattan Institute

The big shift: exploring the new fiscal strategy
Before COVID-19, the Commonwealth government’s main financial strategy had been unchanged for more than 20 years. The COVID-19 crisis upended the strategy, with the government announcing that it will prioritise the creation of jobs over a balanced budget. The presentation will unpack the motivations for the shift, how it was operationalised in the budget and what it means for the medium and long-term financial position

Associate Professor Janine Dixon, Centre of Policy Studies, Victoria University

Structural change and big spending in the 2021-22 budget
We revisit and update last October’s Melbourne Economic Forum presentation on the recovery from the pandemic, providing context for the budget forecasts and what they imply about structural change in the economy over the forward estimates. We examine how this big-spending budget will affect the economy in the context of recovery from domestic containment measures and the ongoing travel restrictions, and weigh this up against the $1 trillion in debt accumulated by 2025.

Dr Barbara Broadway, Senior Research Fellow, Melbourne Institute: Applied Economic & Social Research, the University of Melbourne

Budget 2012/22 – A new focus on women and families?
The 2021 budget includes initiatives on women’s health and economic security, and promises increased spending on child care as one of its major policy announcements – a marked shift from last year’s budget, which was widely criticised as lacking a targeted response to the pandemic’s gendered labour market impacts, and the stress it caused families with caring responsibilities. Overall, will families that care for children or the elderly be better off now, and how does this vary along the income distribution? Can we expect improvements in women’s workforce participation and employment, and will the balancing of family responsibilities and work life become easier?