Australia is set to post the lowest unemployment rate in half a century by the end of year, despite confidence dips due to rising living cost pressures.
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Treasurer Josh Frydenberg will reveal in today's federal budget forecasts that the government anticipates the unemployment rate will drop to its lowest point since 1974 in the September quarter to 3.75 per cent.
The updated figure is 3 percentage points lower than unemployment figures outlined in the first budget handed down following the onset of the COVID-19 pandemic in 2020, with a tighter labour market to assist a needed rise in wages growth.
However improvements in the economic outlook outlined by the Treasurer have come amid an inflationary blowout which has fuelled significant prices felt mostly in petrol and house prices.
The budget handed down at 7.30pm on Tuesday is expected to include a cost of living package which some economists believe will be $4 billion in size.
Mr Frydenberg said the recovery "hasn't been luck", with his fourth budget also set to announce a further $49.5 million for vocational education and training to get more workers into the aged care sector.
"With more people in work and less people on welfare the budget bottom line is improving after providing unprecedented economic support to Australians," he said.
The additional funding to aged care is to cover the cost of education to obtain employment within the sector.
"In this year's budget we're providing more opportunity for people to enter the aged care workforce as part of our plan for a stronger future," Mr Frydenberg said.
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"To do this we are making available an additional 15,000 subsidised vocational education and training places for those working in or looking to enter the aged care workforce."
The Coalition is expected to match and double Labor's pledge to increase New Home Guarantee Scheme spots for regional buyers.
In an attempt to nullify cost of living pressures ahead of the election season, it is widely speculated a temporary cut to the fuel excise tax of around five cents could be unveiled in Tuesday's papers.
Cash handouts for pensioners and families have also been slated as part of the package to ease living costs.
$17.9 billion has also been committed to infrastructure funding over the next 10 years including faster rail projects in Queensland and NSW, while the ACT is set for additional road upgrades.
Labor shadow treasurer Jim Chalmers claimed any improvement in the budget bottom line was not as a result of Mr Frydenberg's economic management during the pandemic.
"It's whether it's the fact that Josh Frydenberg is out there claiming credit for a budget improvement, which flows, in part, from the commodity price spike that we're seeing at the moment," Dr Chalmers said.
"If they cared about cost of living pressures, they wouldn't have spent the best part of a decade going after wages and job security and Medicare."
ANZ in its budget preview flagged there is likely to be substantial improvement in the budget deficit, with the major bank booking a $20 billion improvement to $79 billion since December's mid-year economic fiscal outlook.
It is also expected additional spending promises will increase.
"We think there is more spending to come and anticipate new spending worth around $25 billion over the five years, up from $15-20 billion previously," ANZ said in its preview.
Westpac's most recent consumer index had shown confidence in the economy had slipped 4.2 per cent to a position of 96.6 points, reflecting pessimism is outweighing optimists largely due to rising inflation.
Annual inflation to the December quarter rose 3.5 per cent.
Inflationary pressures have been spurred on by material and supply shortages, and oil price shocks from sanctions imposed by the West on Russia following its invasion of Ukraine.
Prime Minister Scott Morrison said this year's budget would address the cost-of-living pressures.
"What we recognise is the great pressure that small businesses are under right around the country, and we've designed a suite of measures to address those cost of living issues," Mr Morrison said.
