Josh Frydenberg wants to drive Australia’sbelow five percent before he begins the task of budget repair, in a marked shift in strategy.
The treasurer initially set a target of below six percentto begin the repair process after spending billions of dollars protecting the economy from the impact of the COVID-19 pandemic.
The unemployment rate has since fallen to 5.6 percent.
In a speech ahead of the May 11 budget, Mr. Frydenberg also laid outthat will be targeted to get more people into jobs with better pay.
“That is what our fiscal strategy is designed to achieve,” hein Canberra on Thursday, adding this will be another “pandemic budget”.
In the long run, he said thehigher real wages was a lift in productivity.
“That is why the government willand investments to boost productivity and set Australia up for the future,” he said.
This would include measures in skills, infrastructure, tax, energy, the, and deregulation, “to name just a few”.
He told ABC radio before delivering the speech the pandemic caused a lot of uncertainty.
“Our focus right now is to get more people into work because if you get more people into work, you improve the budget bottom line,” he said.
Asked when hethe unemployment rate below five percent, Mr. Frydenberg said that would be contained in the budget forecasts, covering four financial years.
Economics consultant Nicky Hutley described the change in thetarget as an “excellent piece of policymaking”.
But she said everything would hinge on what was actually in the budget because unemployment would not get there without.
Australianchief executive Innes Willox welcomed the treasurer’s more ambitious unemployment goal.
“While making further inroads into unemployment may involve extra government spending if successful, it can also add to economic capacity and improve the budget bottom line in coming years,” he said.
In the speech, Mr. Frydenberg pledged he would not make a sharp pivot towards “austerity”.
Shadow treasurer Jim Chalmers thought it was “remarkable” that Mr. Frydenberg had to rule out austerity measures publicly.
“Austerity should never have been on the table in the first place,” he told AAP.
Mr.threatens both the global and domestic economies. mainly; Australia’s population growth is the lowest in a century, and interest rates are nearly zero.
“For these reasons, we remain firmly in the first phase of the economic and fiscal strategy,” he said.
“We will not move to the second phase of the fiscal strategy until we are confident that we have secured the
A new Treasury paper now puts NAIRU – the non-accelerating inflation rate of unemployment, or the rate of unemployment needed to accelerate inflation and wages – between 4.5 percent and five percent.
Previously it was thought to be five percent.
“In effect, both the RBA and Treasury’s best estimate is that the unemployment rate will now need a four in front.”