The evening of October 06 saw Treasurer Josh Frydenberg present the Australian Federal Government’s long-awaited annual budget. Traditionally submitted on the second Tuesday of May, the budget’s five-month delay was a result of the ongoing COVID-19 pandemic.
Given the economic turmoil wrought by the coronavirus, the 2020 budget was expected by many to include measures designed to increase productivity, consumer spending, and help bring Australia out of recession. In this respect, it almost certainly delivered.
Tax cuts proposed in the budget look set to almost immediately benefit up to 11.5 million Australians, while $4 billion has been directed towards wage subsidies for businesses that hire young, unemployed workers. Overall, the budget is slated to create a $213 billion deficit by March 2021, while Australia’s net debt is forecast to peak in 2024 at $966 billion.
Though there wasn’t much in the budget explicitly related to insurance outside of a $3.9 billion boost to the National Disability Insurance Scheme, the industry has reacted rather positively nonetheless.
Wayne Vergano, CFO at Marsh Pacific, told Insurance Business Australia that “the stimulus measures in the budget are very welcome, both from an SME and large corporate perspective.”
“It should result in a stronger bounce back than otherwise thought, this being of particular interest to an organisation such as Marsh that is working in risk management. The stimulus measures focused on job creation is similarly welcome. This should reverberate through the economy and is something we watch closely here,” Vergano added.
Paul Brennan, senior economist at Suncorp, said that while it was unclear how effective business and personal tax cuts would be in increasing spending, “the government certainly can’t be accused of not trying.”
“Clearly, the amount of money the government is prepared to deploy to kickstart a strong economic recovery is unprecedented,” Brennan noted, adding that forecasts for GDP and unemployment rates predict that the Australian economy is likely to rebound over the coming years. One downside to the budget, according to the economist, is the absence of longer-term structural reforms, though he acknowledged that “overall, the quantum of the new budget measures is larger than expected and are rightly frontloaded into the current financial year to maximise their economic impact.”
For Julie Mitchell (pictured above), workers’ compensation CGM at Allianz Australia, the government’s allocation of $5.7 billion towards mental health services – which includes a doubling of Medicare-subsidised sessions with a psychologist to 20 per year for each patient – was a welcome sight considering the psychological impact of COVID-19.
“To see mental health feature so prominently on the agenda is a positive shift, and it echoes our new research which has revealed the impact mental ill-health has on Australians’ holistic wellbeing,” Mitchell said.
“Sadly, we anticipate the pandemic’s impact is just the start of a much bigger challenge in workplace mental health, with Australian employers urged to dedicate focus to tackle these challenges.
“With the Government doubling down on mental health support, now is the opportune time for workplaces to also do their part in ensuring the mental wellbeing of Australians is protected,” she concluded.
Meanwhile, Emily Amos – managing director of health insurance at Bupa – welcomed boosts to healthcare funding outlined in the budget, stating that it “establishes a reform pathway for private health” insurance in Australia.
“With household and government budgets under unprecedented pressure, and public hospital wait lists set to blow-out as a result of the COVID-19 pandemic, affordable private healthcare has never been more important,” Amos said.
“We look forward to working closely with the Government over the coming eight months on the reform programme and on new initiatives.”