Treasurer Josh Frydenberg says that Australia faces the largest budget deficit since the Second World War, as the coronavirus crisis caused damage to the country’s public finances.
Frydenberg Thursday morning presented an economic update to the federal government, and also revealed that unemployment is expected to peak at around 9 percent in December. He said that the federal government recorded a deficit of $ 85.8 billion in 2019-20, which is expected to explode to $ 184.5 billion in 2020-2021 as a result of record spending.
“These harsh numbers reflect the harsh reality we face,” Frydenberg told reporters in Canberra on Thursday, while delivering an economic and financial update. Frydenberg said the government provided $ 164 billion in direct financial support to help the country during its darkest economic year for generations.
Around the world, there has been an unprecedented $ 11 trillion of support trying to keep the global economy afloat. Mr Frydenberg said that Australia “had been better apart in the economic front than almost any other country in the world during the crisis.” “Although our debt levels have increased, they are still lower than many similar countries which have gone through in this crisis,” said the treasurer.
But he said the outlook remains uncertain, most notably the Victorian outbreak. “it is a painful reminder of how a setback in the fight against the virus has affected the speed and course of our national economic recovery,” he said.
A full set of economic and fiscal data for the four-year forward estimates won’t be revealed until the budget on 6 October.
Although JobKeeper wages and coronavirus supplement support have been extended, government spending to deal with the epidemic is expected to drop from about $ 110 billion in the September quarter to about $ 40 billion in the last three months of the year.
Finance Minister Mathias Cormann said that by then, the government would also be in a position to detail the 10-year medium-term outlook as well. As the international situation persists and in some parts of Australia, there are still very uncertain economic and financial perspectives.
Shadow treasurer Jim Chalmers said the upgrade, which would only give forecasts for last year and 2020-2021, should be more than a “marketing exercise”. We need to know how bad this recession is predicted by the government, how high unemployment will be and for how long, and how much new debt has accrued in addition to the historical debt that existed before the crisis, “he said.