CANBERRA, Australia (AP) — The Australian government yesterday announced plans to cut income taxes, create jobs for young people and stimulate business investment with a raft of pandemic measures that would create a record AUD214 billion (USD153 billion) deficit in the current fiscal year.
Treasurer Josh Frydenberg announced his annual budget plans for the year that started on July 1, with economic forecasts based on an assumption that a COVID-19 vaccine will be available next year.
But the Treasury Department has warned that economic realities could be “substantially different” from its forecasts without a vaccine. Net debt will increase to AUD703 billion (USD503 billion), or 36 per cent of gross domestic product, at the end of the current fiscal year and peak at 44 per cent of GDP in mid-2024 when debt will exceed AUD966 billion (USD691 billion).
“This is a heavy burden, but a necessary one to responsibly deal with the greatest challenge of our time,” Frydenberg told Parliament.
At its peak, net debt as a share of the Australian economy would be half the current proportion in Britain, a third of the share in the United States and a quarter of the Japanese proportion, Frydenberg said.
More than 11.5 million taxpayers among the Australian population of 26 million people would gain an income tax cut back-dated to July 1, according to plan. It needs Parliament’s endorsement.More than seven million would receive a tax cut of more than AUD2,000 (USD1,430) a year.
The tax cuts would cost Australia’s coffers more than AUD50 billion (USD36 billion) over four years. The government is also offering a “JobMaker hiring credit” to encourage businesses to hire younger Australians. Young people have suffered most from job losses created by the pandemic.
Businesses that provide a job to an unemployed person under 30-year-old would be given AUD200 (USD145) a week for up to a year.
The payment would be half that if the employee is aged between 30 and 35. The employees must be given at least 20 hours of work a week.
The government expects JobMaker would support 450,000 young employees.
To boost business investment, the vast majority of companies would be allowed to write off the full value of eligible assets against their tax debt.
“It will dramatically expand the productive capacity of the nation and create tens of thousands of jobs,” Frydenberg said.