Tax cuts will supercharge economy: Frydenberg

Tax cuts and targeted support will be key parts of Treasurer Josh Frydenberg’s arsenal as he seeks to supercharge the Australian economy.

Mar 16, 2021, updated Mar 16, 2021
Treasurer Josh Frydenberg. (Photo: AAP Image/Mick Tsikas)

Treasurer Josh Frydenberg. (Photo: AAP Image/Mick Tsikas)

After a torrid few weeks dealing with a variety of issues that resulted in a dip in the polls, the treasurer will tell a Business Council of Australia dinner of the government’s tax cutting strategy that has seen see billions of dollars returned to people’s pockets, with more to come in the month’s ahead.

“We are by no means out of this crisis but we can see the light at the end of the tunnel,” Mr Frydenberg will say, according to extracts of the speech obtained by AAP.

“Allowing Australians to keep more of what they earn will help to support the economic recovery by giving households more money to spend at local businesses.”

But he will urge the states to think twice before closing their borders from now on, particularly with the JobKeeper wage subsidy due to end at the end of this month.

“The economic consequences of such action are immense,” he will say.

“When new cases arise, as they invariably will, the response needs to be targeted and proportionate while commensurate with the risk.”

Mr Frydenberg will also discuss budget repair as the crisis subsides.

As of the mid-year budget review released in December, the deficit was $197.7 billion in 2020/21 and was still expected to be in the red by $66 billion in 2023/24.

“Fiscal discipline has been a hallmark of coalition governments and will remain so in the post pandemic phase,” the treasurer will say.

The 2021/22 budget is due on May 11.

To date, around $9 billion in tax cuts has landed in the pockets of 8.8 million Australians during the course of the pandemic and a further $2 billion per month in tax cuts will flow between now and the end of September.

“It’s not just the tax cuts that are a weapons in our arsenal, but a whole series of measures that are designed to boost economic activity,” the treasurer told ABC radio.

He pointed to initiatives like the JobMaker hiring credits, the brining forward of infrastructure projects and recent announcements on apprenticeship and tourism packages.

He conceded that in terms of unemployment, it “might be bumpy for a month or two” but he expects a steady decline in the jobless rate over the year.

“Of course there are some on JobKeeper who are going to struggle into other jobs, but overall there is going to be a steady momentum in the right direction overtime,” he said.

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