What does the 2011 Federal Budget mean for you?
11th May 2011: Consumers across Australia have been spared an additional burden after the delivery of a much softer Federal Budget than originally anticipated.
Economist Savanth Sebastian said this year has seen the Government maintain its discipline on spending, handing down a smart Budget that is right for the times and challenges ahead.
“This is a “softly softly” Budget and is by no means as tough as what we were led to believe,” said Mr Sebastian.
“The outcome is understandable in this environment. Looking at the current state of the Australian economy, it has effectively lost momentum and is moving sideways. As a result, the Government didn’t press too hard on spending cuts which could have hurt consumers and businesses.”
Mr Sebastian points to job seekers as the big winners, with the Government taking measures to increase the Australian labour market by boosting workforce participation and increasing the intake of migrant workers. This is positive news as it represents the best way in which the Government can sustain the current economic recovery and keep interest rates low.
Regional Australia also received some strong benefits from the Budget, with a large portion of the funds allocated to roads and other infrastructure to be focused in regional areas.
Low income families will also benefit, with the Government bringing forward up to $300 per year of the Low Income Tax Offset into pay packets and increasing the Family Tax Benefit Part A for teenagers by up to $4,208 per year, with more flexible access arrangements.
According to Mr Sebastian, while the Budget is rapidly moving from deficit to surplus over the next two years and key measures are focussed on keeping wages down by boosting jobs, rate hikes are still on the agenda.
“While the Reserve Bank doesn’t have to jump on the rate trigger, we don’t believe that the Budget handed down removes the risk of higher interest rates. We tip a 25 basis point rate hike in August and also pencil in another move in November,” said Mr Sebastian.
Australians eager to find out how the Federal Budget will affect them will be able to learn more from an exclusive video housed on the Bank’s YouTube channel, featuring an economic overview from Mr Sebastian.
The Commonwealth Bank has also launched an interactive Federal Budget website, housing exclusive commentary from the Bank’s Economics team on how the 2011 Federal Budget will impact Australian businesses.
- Savanth Sebastian’s video can be accessed at YouTube.
- The Federal Budget website can be accessed at www.commbank.com.au/federalbudget.
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