The upcoming May 2021 Federal Budget will focus on economic growth and job creation, aiming to deliver targeted and temporary fiscal support as well as some new policy initiatives, according to the latest research by CBA’s Head of Australian Economics Gareth Aird.

Australia’s economy is on a firmer fiscal footing than it was in December, so the government’s starting point for this year’s budget is materially better. Stronger-than-expected improvement in economic growth, powered by higher output and a surge in commodity prices, means higher government revenue.

Meanwhile, a better-than-forecast recovery in the labour market will deliver Canberra savings on unemployment benefit payments and JobKeeper.

“The Government intends to play a more active role in terms of demand management in the economy compared to pre-COVID-19,” Mr Aird said.

“The aim is to continue to use the fiscal levers in the short run to push the unemployment rate down,” he said,  adding that this year’s budget is set to launch a coterie of new initiatives and support packages aimed at putting more people to work and helping businesses recover from Covid impacts.

Here are five things to watch in this year’s Federal Budget:

#1 Childcare

Cheaper childcare will support families and boost female workforce participation.

#2 Aged care

An estimated $2.5bn/year package for aged care to assist the elderly.

#3 Jobs

Infrastructure, defence, digital and small business spending to boost jobs.

#4 Covid support

Targeted measures for tourism and education sectors.

#5 Tax relief

Extension of low and middle income tax offset will boost disposable income.