Federal Budget 2021: What we know so far

In a week's time the Federal Government will hand down its 2021-22 Budget after what has been one of the most expensive policy years in Australian history.

From JobKeeper to JobSeeker and all the associated costs with shielding the nation from a global pandemic that touched every business sector in the country, many expected this year's Budget to be modest.

But a near unrivalled economic bounce back, better-than-expected unemployment figures and a willingness of Aussie families to spend post lockdown could see the government in a better windfall than expected.

Money

"Whilst there are still risks for parts of the economy, in particular tourism and hospitality, and with some setbacks to the vaccine rollout, it's certainly a rosier outlook than the Treasurer would have predicted when he delivered the last budget in October," said Mark Molesworth, Tas Partner at BDO in Australia.

"This year's budget will be a 'Push Me Pull You' scenario. The need for budget repair will push the Government in one direction, but the whiff of an upcoming election will pull them in the other."

Mr Molesworth predicts much of the budget to be aimed at shoring up gender equality in the workplace, as well as changes to the way taxation works.

"Australia currently has a 20th century tax system operating in a 21st century economy. We need to change the settings to provide a stable tax base even during a downturn like the one we have experienced with COVID19," Mr Molesworth predicts.

"However, there are likely to be tax sweeteners for voters, in particular personal tax rate cuts for middle income earners, with more than 10 million Aussies earning under $120,000 due to face a tax hike from next financial year.

"The Government will be looking to spend money on the policies that will help them win at the polls in 2022."

Partner at Deloitte Access Economics Chris Richardson has an equally rosy outlook, predicting that the Budget will show that Australia's deficits in the four years to 2023-24 will be as much as $98 billion less than Treasury Estimates.

But to get back into the black, some $40 billion will need to be found down the back of the hypothetical Treasury couch.

"Our analysis shows that we may eventually need to save the equivalent of $40 billion a year to get the budget back into balance," writes Richardson.

"Australians do need to realise that there's an eventual bill to pay – it isn't nearly as large as many seem to fear, but nor is it nothing. And the politics here are horrendous.

"If you'd like a yardstick, the last budget that tried to save a similar share of national income was in 2014, and it is widely seen as having torpedoed the fortunes of Tony Abbott and Joe Hockey."

WHAT WE ALREADY KNOW ABOUT THE 2021-22 FEDERAL BUDGET

Savings for working Aussie families

Treasurer Josh Frydenberg has already announced a $1.7 billion package aimed to ease out-of-pocket costs for working families utilising childcare.

From July, the childcare subsidy for families with two or more children aged five and under will increase to a maximum of 95 per cent.

The measure has been forecast to save as many as 250,000 families as much as $2,260 a year.

For example, a family on a combined income of $80,000 with two kids in childcare will save around $54 a week while families on a combined income of $140,000 will be around $125 a week better off.

The current maximum for the childcare subsidy is 85 per cent.

Big spending will focus on dropping unemployment

Speaking to the Australian Chamber of Commerce and Industry, Mr Frydenberg said the entire budget would be aimed at increasing employment opportunities.

"This will be another pandemic budget being delivered in the midst of a once-in-a-hundred year pandemic and just seven months after the last budget," Mr Frydenberg said.

"The Budget will lay out the next phase of Australia's economic recovery plan, to grow our economy so we can deliver the jobs and guarantee the essential services Australians rely on, and keep Australians safe."

Mr Frydenberg said the government's clear goal was to reduce the unemployment rate below five per cent.

Australia's current unemployment rate is currently 5.6 per cent.

Tax breaks for brewers

Brewers and distillers are set to be better off under the 2021-22 Budget, with the Federal Government already announcing tax cuts of up to $250,000 for the sector.

Under the plan, from July 1 the government will remove all excise tax payable on the first $350,000 worth of alcohol that leaves the alcohol producer's warehouse.

The tax cuts will primarily benefit craft breweries and smaller distillers.

More Queenslanders can head to the pub from today, as coronavirus restrictions ease.