Australia to Tap Yellen’s Playbook in Fiscal Push for Jobs

Australia’s fiscal authorities are taking a leaf out of U.S. Treasury Secretary Janet Yellen’s playbook in deploying spending to push the economy toward maximum employment, a stance that keeps policy aligned with the Reserve Bank, Bloomberg News reported. Treasurer Josh Frydenberg says he will deliver a “jobs budget” on Tuesday that’s expected to boost spending on roads and railways to support hiring and extend income-tax breaks for low and middle income earners to keep them spending. There’s also expected to be a major funding package for the employment-heavy aged-care and mental-health sectors. “There’s certainly been a shift in the fiscal stance to a singular focus of getting unemployment as low as possible and that’s very consistent with what the RBA is doing,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “It’s also consistent with a global push toward full employment and returning inflation to central bank targets.” Frydenberg’s enjoyed good fortune as a surge in hiring boosted the tax take and reduced welfare costs, and iron ore soared toward $200 a ton, bringing with it a windfall in tax revenue. The upshot is the deficit this fiscal year is expected to be only three-quarters of the size forecast in December and then almost halve again in fiscal 2022 to A$80 billion ($63 billion). Read more.