Australia is staring down its biggest budget deficit since World War II, thanks to the extraordinary measures the nation has taken to combat the economic havoc of the coronavirus crisis.
It’s not the first time our country’s fight against the pandemic has been compared to a war, and it definitely won’t be the last.
Delivering a definitely-not-the-budget fiscal update in Canberra this morning, Treasurer Josh Frydenberg revealed the deficit shot to $85.8 billion for the financial year of 2019-2020, and is expected to rocket to $184.5 billion in 2020-2021.
“These harsh numbers reflect the harsh reality we face,” Frydenberg said.
Looking at the figures ain’t great, but that deficit can largely be attributed to the JobKeeper package, a system which Frydenberg says has shielded Australia’s economy from further catastrophe.
Some 870,000 jobs were shucked from the workforce between March and May as a result of the Big C, Frydenberg said, adding that the official unemployment rate will eventually rise to 9.25 per cent in the December quarter.
“Without the government’s economic support measures, unemployment would’ve peaked at 5 percentage points higher,” he added.
While JobKeeper appears to have done a number on the budget’s bottom line, the majority of complaints about JobKeeper are that it doesn’t go far enough; when the Treasury revealed it accidentally overestimated the scheme’s cost by $60 billion, the response from Shadow Treasurer Jim Chalmers was that the scheme should be extended to cover ineligible casual workers.
Spending money to keep people from plunging into poverty? Well, many would argue that’s a good thing. It’s almost as if providing financial support to those in need can actually help people through an economic crisis, a discovery which ought to be remembered once the virus fucks off for good.
Paying the deficit off is where things get messy, especially with the Morrison Government, which once promised to lead Australia to its first surplus in yonks (lol) and has already announced adjustments to the JobKeeper scheme to gradually wean hard-hit workers off the program.
The figures suggest that Australians will be paying this one off for a long, long time, and today’s update comes off the back of successive announcements designed to funnel young Australians into fields the Government swears will provide solid job prospects in the years to come.
But there is some slight good news, for all of you debt-obsessed economics wonks out there.
Interest rates remain at rock-bottom prices. Frydenberg said this means that servicing Australia’s debt, which the Government expects to hit $851.9 billion (!) at the end of June 2021, remains a “manageable” prospect.
Frydenberg and Finance Minister Matthias Cormann were both pretty keen to say that Australia is faring pretty well against other developed nations, in both a health sense and a financial sense.
Take that with a virus-sized grain of salt. While we’re not the US, which has experienced a heartbreaking loss of life due to the virus and economic turmoil to boot, Australia is experiencing a once-in-a-lifetime hit to its financial and physical wellbeing.
Can’t wait for the full budget to arrive in October, hey?
