How does the 2020 budget impact young Australians?

The government has handed down a belated budget designed to steer Australians out of COVID-19, but what’s in it for young people? (Image source Melissa Walker Horn on Unsplash.)

By Jordan White | @JordanBWhite1

Treasurer Josh Frydenberg has outlined the delayed 2020-21 budget, with eye-watering spending and a record deficit designed to create jobs and steer Australia out of the COVID-19 recession. 

A $4 billion wage subsidy scheme targeted at young people will create an estimated 450,000 jobs, with a further estimated 100,000 jobs to be created by an apprentice wage subsidy.

The Government will pay employers $200 a week to employ people aged 16 to 29 on Youth Allowance Jobseeker or $100 if they are aged 30 to 35.

Employers will receive the payment for 12 months under the ‘JobMaker’ scheme, and employees will need to work at least 20 hours a week.

A similar scheme will be introduced for new apprentices, who will have half their wages paid by the government at a cost of $1.2 billion.

Being unemployed during a pandemic takes its toll on people’s mental health, especially the young. Medicare-funded psychological services will double from 10 to 20, with $5.7 billion to be spent on mental health services.

See: Young Australians to feel social impact of unemployment for years after COVID-19

Unemployment remains high at 15 per cent for people aged 15 to 24, compared to a national rate of 6.8 per cent.

Treasurer Josh Frydenberg told The Sydney Morning Herald the job market for young Australians will be hit hard by the recession, but hopes these measures will help soften the blow.  

“It’s the Treasury’s forecast that people entering into the workforce are expected to earn 8 per cent less in their first year in work and 3.5 percent less after five years in the workforce as a result of this crisis,” Mr Frydenberg said.

“And that’s if they have a job. So young people are being hit particularly hard, and our focus is very much on getting young people into a job.”

The budget was delayed earlier this year (from the usual second Tuesday of may) due to COVID-19, and now hopes to settle some of that economic uncertainty.  

Tax cuts, research funding, commonwealth funded places

The budget also includes $50 billion for legislated wage subsidies to be brought forward, $1 billion for university research funding, and an additional 12,000 commonwealth funded places in 2021.

People earning between $45,000 and $90,000 will end up with an extra $20 a week. Higher-income earners receive greater benefits, with those who earn more than $90,000 taking home an extra $50 a week.

The tax cuts are unlikely to benefit university students directly, with the median income for undergraduate students at $18,300 according to the National Union of Students survey.

More undergraduate places may sound like welcome news, but they come after the announcement the government’s controversial university fee changes will be supported by Centre Alliance senators.

The tax cuts will be back bated to July in the hopes people will spend the extra money.

$240 million to boost women’s workforce participation

$240 million will be spent on assisting women in the workforce, who have been hit particularly hard by the pandemic-recession.

The package will include $25 million to fund cadetships and apprenticeships in STEM fields and more investments in women’s workplace leadership. More details will be released this year.

No changes to JobSeeker … yet

The 1.6 million unemployed Australians on Jobseeker, who were thrown a lifeline this year after the government announced its coronavirus supplement, still don’t know what will happen to their payments after December 31.

No announcement was made in the budget, with Finance Minister Mathias Cormann telling RN Breakfast a decision about the payment will be “announced later this year”.

Many people—including some 207,000 students—receive JobSeeker, a payment of just $40 a day without the coronavirus supplement.

Pressure has been mounting for the government to raise the JobSeeker rate permanently, with lobby groups and MPs saying a wound back payment will push many Australians back into poverty.

The Conversation estimates dropping the rate to its pre-COVID levels will leave 740,000 Australians below the poverty line of $406 a week. 

An unconventional budget

Unprecedented times call for an unprecedented budget. Unemployment is stubbornly high, interest rates are at a record low, and a government once obsessed with its surplus is spending big.

The budget surplus is estimated to tip $213 billion this year, with net debt forecasted to peak at $966 billion in 2024.

Other spending areas include aged care, health, schools, and infrastructure including dams and gas plants.

The list is far too long to sift through here. If the Treasury’s long-winded reports are too dizzying, you can check out the ABC’s popular winners and losers round-up or The Guardian’s summary.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s