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A faster-than-expected economic recovery and a windfall from soaring iron prices has given the Australian government the chance to spend big.

And with an election due by May next year, Treasurer Josh Frydenberg seized the opportunity with a blizzard of spending commitments on everything from aged care, to tax breaks for craft brewers, to half-price airfares.

Here are the winners and losers:

WINNERS

The Elderly

The big single ticket item in the budget is a A$17.7 billion package to support the aged care sector after an official inquiry exposed shocking conditions in some institutions.

A key focus of this package will be assistance for people to stay in their homes for longer, as well as boosting the quality of services in residential care.

Over-60s who decide to downsize and sell their family homes will also get the chance to funnel up to A$600,000 per couple into their pension savings. In addition, the rules will be loosened for older Australians wanting to put more money into these retirement accounts.

Businesses

The extension of two temporary tax reliefs until June 2023, will deliver big dividends for businesses. Companies will be able to write-off the cost of investment in depreciating assets and to claim-back tax previously paid on prior year profits to recoup subsequent losses.

Together these amount to a further A$20.7 billion in tax relief to business, the Treasury said. Both measures apply to companies with a turnover of up to A$5 billion.

Lower and middle income earners

Around 10 million Australians will benefit from the extension of a tax rebate for another 12 months.

Worth up to A$1,080 for individuals or A$2,160 to couples, with the maximum benefit going to individuals with taxable incomes between A$48,000 and A$90,000.

The government is also removing the current minimum earning threshold of A$450 per month before employers have to contribute to workers’ pensions.

Childcare Users

The government will spend an additional A$1.7 billion to increase childcare subsidies with the aim of encouraging more women to return to full-time work. Australia has one of the highest proportions of part-time women workers in the developed world, with the high cost of childcare a key disincentive to working additional hours.

Hours Issue

Australia's rates of part-time work for women are high internationally

Source: Grattan Institute, OECD

For a typical Australian couple, fulltime childcare costs 18% of household income, compared with the OECD average of 10%, according to the Grattan Institute.

Government subsidy rates will rise for those with two or more children aged five years and under. Higher income earners will also benefit, with the government removing the subsidy cap that was restricted to a maximum of A$10,560 of assistance per child per year.

Other Winners:

• Craft brewers and boutique distillers will be able to sell more beer and liquor before they have to pay excise tax. Businesses will be able to claim a refund on all excise duties up to an annual cap of A$350,000.
• Residents of northern Australia, who have long struggled to access affordable insurance, may get some relief from a new A$10 billion reinsurance pool for cyclone and flood damage. This will be complemented by a pilot project of A$40 million to make older apartment buildings more resilient to extreme weather.
• Construction companies will benefit from another boost to infrastructure spending. The government has earmarked an additional A$15 billion for a range of infrastructure projects, including a new freight hub in Melbourne and upgrades to key highways around the country.

LOSERS

The Border Dependent

In October’s Budget the Treasury had assumed international borders would open this year. The slow-pace of the vaccine rollout and the resurgence of the virus in places like India means that’s now been pushed out to mid-2022. That’s bad news for sectors dependent on international arrivals, whether that’s students or tourists, as well as those hoping to see overseas family.

Employers who’ve grown accustomed to being able to recruit workers from overseas are also starting to feel the pinch, with skill shortages developing.

And those hoping the government would stump up for substantially more quarantine facilities to allow more people back into the country will also be disappointed.

The Priced Out

While there are numerous small measures designed to boost access to homeownership - such as helping single-parent families get a home loan with just a 2% deposit - there’s little attempt to address any of the structural pressures.

House prices have outstripped wage growth for years, leaving places like Sydney as one of the world’s most unaffordable housing markets. Record low interest rates have supercharged the market, pushing house prices increasingly out of reach for average earners.

The Opposition

The combination of increased fiscal spending and ultra-loose central bank monetary policy means the Australian economy is likely to run red-hot.

Losing Ground

The Australian coalition government has fallen behind in the opinion polls

Source: Newspoll - two-party preferred vote

A return to growth coupled with falling unemployment would give the government a base to campaign for re-election on, even as frustrations have grown about the slow pace of reopening to the world. A high-spending government is particularly a problem for a center-left opposition whose traditional pitch to the electorate has been to improve public services.