Key takeaways of the Mid-Year Economic and Fiscal Outlook 2021-22
December 20, 2021
As the festive season approaches and industries across Australia start to wind down, treasury has been hard at work and produced the Mid-Year Economic and Fiscal Outlook (MYEFO).
In basic terms, this is a check of the pulse of the economy, and below are the major highlights of this lengthy tome:
Overview of Mid-Year Economic and Fiscal Outlook
As a whole, the Mid-Year Economic and Fiscal Outlook report paints a positive picture of the Australian economy.
The major challenge for the economy over the past six months was the emergence of new COVID-19 variants, along with the extended lockdowns in Victoria, New South Wales and the Australian Capital Territory.
These lockdowns had a two-pronged attack on the economy:
- A reduction in tax receipts, as general business turnover decreased
- An increase in government expenditure, represented by business support grants and disaster packages.
Even through these challenges, the economic outlook ended up being healthier than what was announced during this year’s budget.
An increase in tax receipts meant the budget deficit for the year was less than originally forecast during this year’s budget.
In addition, the unemployment rate has decreased, with unemployment expect to drop to 4.25 per cent by June 2023. This is a significant milestone, as it will be the first time since the Global Financial Crisis that unemployment has consistently been below 5 per cent.
The federal government has announced various support packages to industries that have been significantly disrupted by COVID-19, including:
- Payments to various industries that are impacted by lockdowns and reduction in general travel. This includes support to help airlines ramp up when demand increases, along with extensions to programs assisting the tourism sector.
- Additional support for the arts, with further payments towards the Arts Sustainability Fund, to help support artists, crew and live performance operators.
- The early childhood learning sector has had various additional payments and support to assist with shutdowns in Commonwealth Declared Covid Hotspots.
Recognising the impact of ‘The Great Resignation’ along with general labour shortages, the federal government has undertaken several schemes to increase the pool of eligible workers, including:
- More funding for pre-employment and reskilling programs
- More funding for apprenticeship programs
- Introduction of new work visas
- Increasing capacity of current visas, and
- Changes to work limits and requirements for existing visas.
These changes are hoped to increase the general labour pool and assist with economic recovery and bouncing back.
Throughout the MYEFO report, there were a few key industries and regions that are being targeted for support or additional funding, which could represent real opportunities for those involved. This includes:
- Regional growth is being targeted, both with increased funding for road and infrastructure works, alongside additional funds being allocated towards the agricultural sector to increase yield
- Digital economy growth is being targeted, with the aim for Australia to have a world-leading digital presence by 2030. The government aims to achieve this through additional funding for Digital Identity Systems (as can be seen with the Director Identification Number) as well as improvements to regulatory framework
- With the announcement of a net zero emissions target, the government has established a Low Energy Technology Commercialisation Fund to assist in reaching net zero emissions by 2050. This is in addition to increased funding towards renewable energy projects.
Turn to LDB for support
The general optimistic tone of the MYEFO report, alongside the increased support, paints a picture for real opportunities for business growth after the hibernation experienced throughout the past two years.
LDB Group is well versed to assist you or your business with any growth projects, business strategy, and general future planning as the new economy and changes are realised.
If you need any advice, please contact us by calling (03) 9875 2900 or filling out the contact form below.