Australia has a new government
The ALP won the election and is set to Govern most likely in its in own right or as a minority government. Following its loss in the 2019 election which was partly blamed on a “radical” tax & spend agenda, the ALP adopted a “small target” approach this time, so its economic policies are not significantly different to those of the outgoing Coalition Government. However, there are still some areas of difference and uncertainty. This note looks at what is expected in terms of policies and implications for the budget, economy & investment markets.
Policy changes
Based on their election platform, key economic policy changes under the Labor Government will include the following:
Faster climate action with a 43% cut to emissions below
2005 levels by 2030 versus the Coalition’s 26-28% cut. This
could be increased under pressure from Greens and “teals”.
This includes investing $20bn in electricity infrastructure and
boosting renewables to 82% of electricity by 2030.
An extra $2.5bn per annum in aged care funding.
An extra $750m on Medicare.
Raise the childcare subsidy to 90% for the first child in care.
Create 20,000 more university places & free TAFE places.
Support for manufacturing with a $15bn National
Reconstruction Fund and Federal procurement programs.
Housing support policies with: a $10bn Housing Australia Fund to build 30,000 social homes over five years; a Help to Buy scheme with the Government to take up to 40% equity in up to 10,000 first home buyer home purchases a year; support for the Coalitions 50,000 low deposit purchase scheme with an additional 10,000 places in regions; support for the Coalition’s super concessions for downsizers over the age of 55; and the establishment of a National Housing
Supply and Affordability Council to help boost supply.
Encourage the Fair Work Commission to raise the Minimum Wage by 5.1%. This would normally flow through to 2.6m workers on awards and raise concerns about a wage price spiral, but PM Anthony Albanese has suggested it would
only cover those on the minimum wage which is 180,000.
Make gender pay equity an objective in the Fair Work Act.
The ALP proposed no tax hikes apart from measures to tax multinationals more. But it’s not committing to the 23.9% Coalition cap on the tax to GDP share and wants to shift the focus to the “quality” of spending, suggesting a somewhat
higher tax and spending share of GDP over the long term.
Implement the Uluru Statement from the Heart in full.