90,000 more Aussies find work in November
Australia's road ahead is "challenging" but the economy is expected to do significantly better than the federal government previously feared as unemployment rebounds and the budget recovers faster.
Treasurer Josh Frydenberg has revealed Australia's unemployment rate is expected to recover to pre-COVID19 levels in "around four years," which will be much sooner than in past recessions.
"Australia is outperforming all advanced economies," he said.
The new figures expect unemployment to drop to 6.25 per cent in 2021-22 and dramatically fall to just 5.25 per cent by 2023-24.
The labour data from the Australian Bureau of Statistics showed a decrease in unemployment of 0.2 per cent from seven per cent in October, despite the number of people looking for a job slightly increasing.
The MYEFO has also forecast a slightly better budget bottom line, with a deficit of $197.7 billion this financial year, compared to the $213.7bn projected at the federal budget just two months ago.
"We have come a long way," Mr Frydenberg said.
"This improved outlook is off the back of unprecedented levels of support."
Finance Minister Simon Birmingham said the Australian experience demonstrated that health and economic success goes "hand in hand" during the COVID19 crisis.
"The budget deficit is now expected to be $24. billion, less than the previously being forecast," he said.
Mr Birmingham said the improved economic situation meant the government was expecting more than $23 billion extra in revenue from receipts over the next four years.
It comes as huge demand in China for Australian iron ore has fuelled record high prices but the federal government has opted to play it safe and not factor in the potential windfall in its budget recovery.
Despite iron ore averaging about US$132 a tonne in the past month, the MYEFO will still assume a steady decline to $55 by the end of next September in a move described as a "prudent approach".
China's large stimulus program in the wake of the COVID-19 crisis has driven strong demand for iron ore at the same time Brazil has been unable to produce its normal volume for export.
This has resulted in a temporary boon for Australian exporters, but the government has opted to manage expectations and assume the high prices will not result in long term higher income receipts to boost the budget bottom line.
Treasurer Josh Frydenberg said it was "unclear" how long the Chinese stimulus program would persist or when normal iron ore production levels would resume in Brazil.
"The government continues to take a prudent approach to its commodity price assumptions in the Budget as the global economic outlook remains uncertain," he said.
"In the face of a one in a century health and economic shock, Australia remains among one of the best performing developed nations in the world supported by resilient economy and world leading resources sector."
MYEFO will also include a billion dollars in new money to be poured into the aged care sector to help clear the massive waiting lists for in-home care packages and provide mental health support for the elderly.
For the third consecutive year the federal government will unveil an increase in aged care spending in MYEFO, this time creating 10,000 new home care packages at a cost of more than $850 million alone.
The additional investment brings the total number of packages funded to 50,000 since the Aged Care Royal Commission's interim report was released.
It recommended the entire waiting list of about 100,000 be cleared.
Prime Minister Scott Morrison said the health and wellbeing of older Australians was "an absolute priority".
Meanwhile figures released by the Parliamentary Budget Office last week show Australia's debt and deficit will stabilise over the next four years and "improve" in the medium term as a result of the anticipated economic recovery and winding back of COVID-19 related policies.
Before the pandemic Australia's net debt was projected to be almost zero in a decade, but after the sharp increase this year, it will slowly fall to about 40.9 per cent of GDP, or $1.29 trillion by 2030-31.
Despite the high debt level, the interest payments on the money borrowed by the government are projected to remain lower than for "most of the last 75 years" due to historically low interest rates.
Originally published as 90,000 more Aussies find work in November