We also need to focus more on skills shortages. Yes, the digital skills programme will continue, but given the skills shortages advertised in media headlines every week, $44m seems low. Low unemployment is one of those perverse concerns that economists have, and generally where unemployment is under 5%, which is what the government is aiming for, you start to see skill shortages and competition for workers leading to wage inflation.
The other watch out was that the majority of the numbers were based off an underlying assumption that the border was substantively open by January 31st, 2022. This creates urgency for the vaccination programme to kick up a gear so the border can open.
What’s our take?
Overall, we think the economic outlook is steady and positive. Budget 2021 follows the playbook and represents, as the Minister of Finance says, a balance across many competing objectives. Under no circumstances was it a lolly scramble and the extra spending is impactful and carefully targeted. There is a very narrow range of new initiatives, but they have large budgets, so are more likely to make a difference.
Viewed as a one-year budget its good, and it was encouraging to see more of a sustainability and climate change focus peppered throughout the different announcements – however we need to see action on those initiatives next.
It’s safe to say that this budget lives up to its name of being focused on wellbeing and recovery but the question remains, have they dug too deep into next years’ pockets?