Labor has blasted the Morrison government over confusing vaccination targets in Tuesday’s budget, saying the bungled rollout will weigh on Australia’s economic recovery, with real wages to decline despite record government spending.
As the treasurer, Josh Frydenberg, hit back at suggestions the big-spending “pandemic” budget had abandoned Liberal “true believers”, Labor homed in on uncertainty about the vaccination targets that underpin the budget’s rosy economic assumptions.
According to the budget papers, which show growth rebounding to 4.25% in 2021-22 and unemployment falling below 5%, Treasury’s economic forecasts assume a population-wide vaccination program will “likely” be in place by the end of 2021.
On Tuesday, Frydenberg said the assumption was based on every Australian having two doses by the end of the year, however, Morrison on Wednesday refused to back that up.
“These are assumptions … that Treasury put together in the budget to guide their assessment of the estimates that they prepare,” Morrison told parliament.
“That is not a policy statement nor is it a policy commitment of the government. It is a Treasury assumption that has been put in place and it makes no reference, I note, to second doses, it only refers to doses.
“The vaccination program will continue to roll out [and] I would refer members to the government’s policy statements in relation to the timing of the program.”
On Wednesday night, Morrison said the budget did not rely on the assumption “solely or even completely” and it would not make a material difference if the vaccination program ran into 2022.
“The vaccination program as it is set out in the budget papers just assumes that it’s likely that this will be in place by the end of the year, but that could happen with two doses, one dose and it could be many months on either side of that, and that will not have a material impact on what is in this budget, and it would be a mistake to think that it did,” Morrison told ABC’s 7.30 program.
The budget papers note that problems with the vaccine rollout could weigh down the economic recovery outlined by the government, saying the once-in-a-hundred year pandemic was creating a period of “extreme economic volatility and heightened uncertainty” which made forecasting more difficult.
“Delays in the vaccine rollout, the emergence of additional strains of the virus, or alternatively, a more rapid recovery, are possible significant events that could cause forecasting errors to be larger than normal,” the budget, which allocates $1.9bn to the vaccination strategy, states.
Labor’s shadow treasurer Jim Chalmers said the country was being held “hostage” to Morrison’s “incompetence” on the vaccine rollout and quarantine system, casting doubt on the forecast recovery.
“It’s been one humiliation after another when it comes to the prime minister and vaccinations; he made all of these promises which he failed to deliver, then he abandoned the targets all together,” Chalmers said.
“There are weasel words in the budget about vaccinations and nobody is any the wiser today when the prime minister thinks that the Australian people will be vaccinated so that we can properly open up the economy again.
“You can’t have a first rate economic recovery with a third rate vaccine rollout.”
According to the latest vaccination statistics released by the federal government on Wednesday, there have been 2.81m doses administered across the country, with about two-thirds of these administered by the commonwealth.
The finance minister, Simon Birmingham, sought to clarify the government’s position, saying he did not expect all Australians to be vaccinated by the end of the year, but that vaccines should be available for every adult that wanted one.
“There’ll always be those who decline vaccines. And it will depend on the take-up by Australians. I urge all Australians to follow the health advice and get vaccines when they’re able to do so,” he told ABC TV.
“We hope, everything going to plan, Australians who make that choice will be vaccinated.
“I appreciate you’re looking for an iron-clad, rock-solid, 100% guarantee. What we’ve seen in the vaccine rollout to date, not just domestically, but internationally, there are complexities involved.”
He said the most important assumption in the budget was that Australia continued to suppress the Covid-19 vaccine.
Labor also challenged the government on the wage growth forecasts in the budget, with workers’ wages not expected to increase in real terms until 2024-25.
Wage growth is not predicted to nudge above inflation until 2024-25, when it reaches 2.75% compared to a consumer prices index of 2.5%.
With inflation expected to be higher than wage growth in the meantime, Chalmers said the budget had failed workers.
“It’s not a recovery if people aren’t getting real wages growth. It’s not a recovery if people are getting left behind or left out in the cold, but that’s what the government’s own budget is predicting,” Chalmers said.
“Only a Liberal government could spend $100bn dollars, rack up a trillion dollars in debt and still have workers go backwards,” he said.
The Greens leader Adam Bandt also took aim at the budget, saying it was “built on wage cuts”.
“It’s tax cuts for billionaires and handouts for big corporations, but real wage cuts for workers and poverty for the unemployed.”
Frydenberg said wages were not growing as fast as the government would like, but the government’s focus was on bringing down the unemployment rate, which would lead to wages lifting in the final year of the forward estimates.
“We want to drive wages up, the way to do it, is through driving the unemployment rate down,” Frydenberg said.
Speaking at the National Press Club at the traditional post-budget address, Frydenberg also rejected suggestions that the government was no different to the Labor party in delivering a big-spending budget.
“This budget stays true to the Liberal party’s values and principles, but it also responds in the middle of a pandemic,” he said, quoting former prime minister John Howard who advised him there were “no ideological constraints” in responding to a crisis.
“And if I walk into the wilderness one day and know that I have done my small bit to help a generation of Australians avoid long-term unemployment, what the economists call the scarring of the labour market, I will be proud of that.”