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BUDGET 2021: spending for equality

Senior Economist at ANZ

Published May 11, 2021

From an equity perspective, the big spending in the 2021 Australian Federal Budget ticks a lot of boxes.

When we think about the forecasts in the budget, like the government’s expectation unemployment will go down to 4.5 per cent, they have an impact on inequality. The best thing you can do to help reduce inequality is to give someone a job, so reducing unemployment is a great step.


There's definitely a gender lens on this budget. The centrepiece of that is the childcare measure, $A1.7 billion over three years, starting from July 2022. This measure removes the annual cap and increases the subsidy for the second or third child in a family.

These childcare measures are quite important because they help remove some of the disincentives for women working a fourth or fifth day during the week. Sometimes women face an 80, 90 or 100 per cent loss in their incomes on those fourth or fifth days.

This measure reduces that disincentive but doesn't totally eliminate it, so it's one step in the right direction.

There were some other measures for women around security and safety that are obviously quite welcome, but when examining the Federal Budget with a gender lens it's the aged care package that’s significant - $A18 billion over four years to be spent on both residential aged care and home care packages. This is also really targeted towards women, because when we think about the workforce in residential aged care, 87 per cent of them are women.

From a broader perspective, we had tax cuts, notably the extension of the low and middle income tax offset for another year, worth $A7.8 billion. That will be paid in the second half of 2022. When we get these types of tax cuts for lower income households, they do tend to get spent. That's a good thing for the economy, supporting business and jobs as it gets recycled back through.

Felicity Emmett is Senior Economist at ANZ

BUDGET 2021: spending for equality
Felicity Emmett
Senior Economist at ANZ

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