Another key factor is the national rollout of the coronavirus vaccine. The government hopes all Australians will have had at least one dose of either the Pfizer or AstraZeneca vaccine by October.
“Elections are too hard to win. I cherish every day, we will do it for the time we said we will,” Mr Morrison told the weekly meeting of Liberal and Nationals MPs.
At the weekend he said Australians were “relying on me and my team to protect their livelihoods, to protect their lives, to maintain the health of the country, to make sure we roll out this vaccination program”.
“We remain very focused on the things that are impacting them every single day of their lives where they are,” Mr Morrison said.
A two-budget strategy would allow Mr Frydenberg to address a potential political problem when millions of Australians face being up to $1080 a year worse off.
The end of the low and middle-income tax offset for the 2021-22 financial year means people earning between $48,000 and $90,000 will suffer a $20 a week hit to their take-home income with up to 10 million taxpayers suffering.
There are approximately 3.4 million people, of which 50 per cent are women, who receive the full $1080 value of the offset plus another 5.5 million who get part of it.
But extending the tax offset by another year would be a major blow to improve the budget bottom line, with analysis by the Parliamentary Budget Office finding it would cost between $7 billion and $8 billion for every year it’s maintained.
Under December’s budget update the Coalition would take a $108.5 billion deficit and gross debt headed beyond $900 billion to the next election.
The state of the budget, and the level of debt carried by the federal government, is also a key issue for investors.
Crediting agency Fitch on Monday maintained its AAA rating for Australia but also kept its negative outlook for the nation’s finances. Australia is one of only nine nations to have a AAA credit rating from each of the three major agencies.
Fitch said the Australian economy had “weathered the pandemic well” compared to other AAA-rated nations, with the economy expected to contract by 2.8 per cent in 2020 and then expand by 3.8 per cent this year.
“This performance reflects successful virus containment and an effective fiscal and monetary response consistent with a policy framework that has underpinned the economy’s resilience to shocks over the medium term,” it said.
But it also noted the budget deficit would remain large compared to similar countries while government debt is forecast to reach 62.9 per cent of GDP by 2022. Debt was at 41.8 per cent of GDP before the pandemic.
Fitch said its negative outlook for Australia reflected the “uncertainty around the medium-term debt trajectory following the significant rise in public debt to GDP [level] caused by the response to the pandemic”.
Rob Harris is the National Affairs Editor for The Sydney Morning Herald and The Age, based at Parliament House in Canberra
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.