Treasurer Frydenberg has indicated that the government will be removing the training wheels when he unveils the budget in October, prioritising personal and business tax cuts over more large stimulatory measures.
“It’s one aspect of the economic plan that we are working on in the context of the budget,” Mr Frydenberg told media.
“As you know, we legislated $158 billion worth of tax cuts after the last election, they were in three stages. Tax cuts put more money into people’s pockets, that means more spending, more spending means more jobs, and that’s obviously critical in the context of the economic recovery.”
Quizzed on whether uncertainty might prevent people from spending the savings, Mr Frydenberg said that the lifting of restrictions would restore consumer confidence and productivity.
“As the restrictions are eased and more people get back to work, there’ll be greater propensity to consume and to spend,” Mr Frydenberg said.
“In seven out of the eight jurisdictions jobs are coming back. Of the 1.3 million Australians who lost their job or saw their hours reduced to zero since the start of the crisis, around 700,000 are now back at work.”
But Mr Frydenberg also stressed that any recovery hinges not only on budget measures, but state borders reopening – a sticking point in the relationship between the state and federal governments as they try to lift the country out of recession.
“I think the strict border positions that we’ve seen from some states need to be relaxed, it needs to be more flexible, it needs to better reflect medical metrics, and be more transparent and lead to a more targeted approach,” Mr Frydenberg said.
“That’s why the Prime Minister is pursuing a common definition of a so-called hot spot.”
Other support measures, including the JobSeeker rate, are also facing tweaks at the end of the year.
“We’ll consider at the end of the year what we do with the JobSeeker rate,” Mr Frydenberg said.
“What we recognise is that those on lower incomes, or those out of work have a higher propensity to consume, but at the same time we need to get the balance right. What we need to do is ensure that there is still the ability and the incentives for people to go out and find work, that’s going to be critical to the recovery.”
