Plenty of sugar; not much protein; little to even the spread

Australia’s federal budget outlines big public-sector investment and the private sector is being encouraged to come to the party, according to a panel of ANZ experts, in a boost which is aimed at turbo-charging the post-COVID economy.

Speaking on podcast in the aftermath of the release of the 2020-2021 Australian Federal Budget, ANZ Senior Economist Cherelle Murphy said the budget was one with a “pretty big wow factor”, giving Australian businesses a lot of reasons to spend.

“There’s an awful lot of spending going on here,” she said. “Really what the message [from the government] is here is ‘we want the private sector to get on with it. We want the private sector to keep spending because of late it’s been the public sector that’s kept the economy afloat’.”

Murphy made the comments on an ANZ customer call alongside Chief Economist Richard Yetsenga and MD, Institutional Australia Tammy Medard. You can hear an edited version of the conversation on podcast below.

Yetsenga said the most-important job of the budget in a post-crisis recovery was to ensure the cyclical recovery, which it had achieved, “in ballpark terms”.

“I think we have to give the government a tick on doing what they can to cement the recovery,” he said.

Beyond the recovery, Yetsenga said what the budget delivered for the structural agenda - and those the pandemic has hit hardest - was much sparser.

Addressing industry, he said as the COVID recovery continues to gain steam, businesses should prepare for fiscal policy to play an increasingly large role in the direction of the economy in the future.

“From a company perspective, expect fiscal [policy] to be a big influence on your sector and your operating environment from time-to-time - particularly if your sector is very cyclical,” Yetsenga said.

Medard said it was pleasing for businesses to see an “adrenalin shot” of economic stimulus through the budget, but what was critical was how industry would react.

“What remains to be determined is whether this has been – and we’ll find out over the next 12 months, I think – actually enough to drive confidence in the business community to focus on growth and investments again, because that’s… what this economy really needs,” she said.

“We need all our clients… to feel supported to be able to go forward and grow their business and think about investments again.”

The conversation also touched on the ongoing impact of COVID, the changing fiscal landscape, and the transformational nature of digital. Listen to the podcast above to find out more.

Shane White is Content Manager at ANZ Institutional