The 2021 federal budget reveals huge $311bn cost of Covid to Australian economy | Australian budget 2021

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The government has committed to spend a total of $311bn to fight Covid-19, including $20bn on health support and $290bn in economic stimulus.

According to Tuesday’s budget papers, the government has spent an extra $41bn on economic support and $3bn on health since December’s mid-year economic update.

The $311bn figure captures only the spending side – a downturn in revenue has also contributed to the $161bn budget deficit.

The true figure is also likely to be much higher because the budget papers blame Covid for everything from an increase in spending in onshore detention to increased auditing work at the Australian National Audit Office.

So where has all this money been spent – and where is there more still to come?

Health measures

Medicare

According to the budget the government will provide $879m over two years to support Medicare, including pathology for Covid-19 testing ($557.1m), telehealth services ($204.6m), commonwealth respiratory clinics ($87.5m); access to the pharmaceutical benefits scheme ($11.5m); supporting regional and remote Indigenous communities ($11.2m); and mental wellbeing support through Beyond Blue ($7.1m).

Emergency response

The government will provide $845.3m over two years from 2020-21 including $487m to expand quarantine services at Howard Springs in the Northern Territory; $271.5m for the national partnership on Covid-19; and $86.6m to expand the national incident centre and national medical stockpile.

Vaccines

The government will provide $1.9bn over five years for vaccines, including: $777.8m for the surge workforce, GPs and pharmacists to administer them; $510.8m in payments to the states for the rollout; $358.8m for monitoring and reporting; $238.8m for distribution logistics and storage; and $6.7m for the communications campaign.

The government has contracted for an extra 30m doses of the Pfizer vaccine but will not reveal the cost due to commercial-in-confidence sensitivities.

Similarly, the budget states the government will provide funding to the department of industry to develop an onshore mRNA vaccine manufacturing capability, but does not say how much this will cost.

Economic measures

Jobkeeper

By far the biggest cost of Covid – and the biggest economic stimulus in Australia’s history – has been the $89bn jobkeeper program, which paid wage subsidies for 3.8m Australians. The scheme ended in March.

Cashflow boost

An early stimulus measure, the $35bn cashflow boost program supported 800,000 businesses and not-for-profits with payments of between $20,000 and $100,000.

Coronavirus supplement on jobseeker

The $20bn coronavirus supplement provided more than 3m Australians with fortnightly payments of $550, before it expired in March and was replaced with a small permanent boost to the jobseeker payment.

Full expensing and loss carryback

Originally slated to cost $31.5bn in the October budget, these two business-friendly measures were extended in Tuesday’s budget for a further 12 months at a cost of $20.7bn.

Personal income tax cuts

In 2020-21 the government accelerated income tax cuts and retained the low to middle income tax offset at a cost of $17.8bn.

On Tuesday it extended the low to middle income tax offset for a further year, providing $7.8bn in personal income tax cuts in 2021-22.

Homebuilder

Providing grants of $25,000 in 2020 and $15,000 in 2021 helped Australians build new homes or conduct extensive renovations. Tuesday’s budget extends the HomeBuilder program by $780m by allowing commencement of works within 18 months, up from the original six.

Infrastructure

The budget provides an additional $15.2bn for infrastructure. As it’s a form of stimulus, the government counts this as Covid-related spending.

Aviation, tourism and arts

The federal government has provided a total of $2.7bn to the aviation sector.

It provided $1.2bn to tourism, including the cost of the half-priced flights to select locations from April to July.

The budget delivers $223m to support the arts sector, including $125.6m for events and productions; $50.8m for local film and television; and $20m for independent cinemas.

Education and employment measures

Universities

In 2020-21 the government provided $903.5m for extra university places.

JobTrainer

The budget provides $506.3m over two years to extend the JobTrainer fund to deliver about 163,000 additional low-fee and free training places in areas of skills need.

Jobseekers

The government will provide $258.6m over four years from 2020-21 to increase participation in the labour market, including for the local jobs program for 51 employment regions and a boost to wage subsidies for disadvantaged jobseekers.

Foreign affairs and aid measures

On Tuesday the government announced it will provide $119.9m over four years to increase consular capacity to support vulnerable Australians overseas, and $37.1m over two years to support the Indian response to Covid-19.

The consular assistance will include 120 facilitated flights by June 2022 to bring Australians home. There are currently 34,500 Australians registered with Dfat as wishing to return from overseas.

These measures come on top of $523.2m for regional vaccine access, a $100m partnership with Quad partners aiming for vaccines in the Indo-Pacific, a $1.5bn loan over 15 years to Indonesia to manage fiscal pressures from Covid-19, and a $558m loan to the Papua New Guinea government to supports its Covid response.

Hafta Ichi
Source: The Guardian
Keyword: The 2021 federal budget reveals huge $311bn cost of Covid to Australian economy | Australian budget 2021

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