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Budget built on a ray of hope but with reality check that nothing is certain

Published: (Updated: ) in Australian News by .

This budget is built on an assumption that a vaccine for Covid-19 will be found and delivered by next year.

ANALYSIS: 2020 has been a gloomy year, but Josh Frydenberg's budget is built on a ray of hope.

The Treasurer and Finance Minister made the call to build the budget on an assumption that a vaccine for COVID-19 will be found and delivered by next year.

"A population-wide Australian COVID-19 vaccination program is assumed to be fully in place by late 2021," the budget papers say.

It seems like a big call to make given there are no guarantees a vaccine - despite promising candidates – will be found.

FEDERAL BUDGET 2020: Winners and losers

Minister for Home Affairs Peter Dutton, Prime Minister Scott Morrison, Deputy Prime Minister Michael McCormack and Treasurer Josh Frydenberg depart the House of Representatives after the Treasurer handed down the Budget. Picture: Alex Ellinghausen

But the decision is in line with the optimism from the chief medical officers.

It's a budget that seeks to inspire confidence and optimism. It is hoped extra cash in workers' pockets via tax cuts will encourage them to spend and give the economy a much-needed boost.

All budgets need a starting point, and Deloitte Access Economist Chris Richardson believes it was the right assumption to make.

"At some stage it will be true that the medical side of this will be in the rear-view mirror and at that stage we will be able to recover," he says.

"Late '21 for a reasonable number of Australians to be getting a reasonable vaccine is a reasonable assumption to be making."

READ MORE: Your two-minute guide to the 2020 Federal Budget

The budget predicts over the next four years things will get better.

The unemployment rate will fall, the economy will begin to grow, and the eye-watering deficits will reduce from $213.7 billion to $66.9 billion in 2023-24.

It's a budget that seeks to inspire confidence and optimism.

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It is hoped extra cash in workers' pockets via tax cuts will encourage them to spend and give the economy a much-needed boost.

Extending the instant asset write off to virtually all Australian businesses, except the miners and the banks, to buy equipment, machinery, vehicles to name a few.

And incentives to employers to give young people on JobSeeker a go.

But Treasury also notes: "Outcomes could be substantially different to forecasts, depending upon the extent which these assumptions hold."

The budget also includes an "upside scenario" – where things improve faster and "a downside scenario".

It assumes multiple outbreaks see strict containment measures brought in resulting in a fall in employment, confidence and a dive in economic activity to the tune of $55 billion lower than the forecasts across 2020-21 and 2021-22.

A reality check that nothing is certain.

More 2020 Federal Budget coverage

Our two-minute guide to the budget
Hiring credits, expanded write-offs on offer for business owners

Winners and losers: Who gains the most from the 2020 budget?State by state: Road and rail funding around Australia
Tax cuts: How much Aussie families will receive

How the ordinary Aussie family will be affected by this year's budget

Source: 9News https://www.9news.com.au/national/federal-budget-2020-9news-analysis/165ea0d3-ded3-4f47-8c92-3ff19a50461c

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