Rising cost of

Christmas nightmare in coronavirus recession

WE’LL BE DOING EVERYTHING TO GET PEOPLE BACK INTO JOBS AND ULTIMATELY GROW THE ECONOMY. FEDERAL TREASURER JOSH FRYDENBERG

ONE in 10 Australians will be out of work by Christmas as the federal government crashes through its debt ceiling to pay for a $289bn economic lifeline that has saved 700,000 jobs.

The budget will be a whopping $184.5bn in the red by the middle of next year, the worst deficit since World War II, as Josh Frydenberg warns generations to come will bear the burden of paying back gross debt totalling $851bn.

The nation’s credit card bill is now worth more than $30,000 for every man, woman and child, and is 45 per cent as big as the economy as a whole.

Treasurer Josh Frydenberg will use a National Press Club speech on Friday to suggest Australia is better prepared to recover than other countries.

The global economy is expected to shrink by $12 trillion this year — 60 times the size of the contraction during the global financial crisis — and 480 million jobs will be lost.

Fast-tracking income tax cuts, extending emergency industrial relations changes for stressed businesses and new infrastructure spending are all on the table for Mr Frydenberg’s October budget, as well as skills and training reform and support for manufacturing.

With population growth expected to plummet to the slowest rate in a century, Mr

Frydenberg will say that Australia can only recover “by creating the most dynamic and flexible economy we possibly can”.

Australia’s unemployment rate is currently 7.4 per cent, although the government believes the effective rate is at 11.3 per cent, given the number of people who have dropped out of the workforce or been stood down.

It is now expected to peak at 9.4 per cent at the end of the year.

Economists said Mr Frydenberg’s budget update, released on Thursday, loomed as a “best-case scenario” for growth without further coronavirus lockdowns.

AMP Capital chief economist Shane Oliver tipped this year’s deficit would end up closer to $220bn.

Mr Frydenberg said the sea of red revealed “the real cost to the budget of protecting lives and livelihoods as a result of coronavirus”.

He steered clear of laying out a plan to cut spending to reduce the deficit, saying the government would not put a time frame to get the budget back into the black.

“We’ll be doing everything to get people back into jobs and ultimately grow the

economy,” the Treasurer said.

Opposition treasury spokesman Jim Chalmers said: “Australians already know the economy is in bad shape — they need to hear what the Morrison government is going to do about it.”

Finance Minister Mathias Cormann said Australia was in a “better, stronger, more resilient position than almost any other country around the world”.

Australia’s triple-A credit rating was reaffirmed after the update, with global ratings agency S&P saying it expected the budget position would improve “during the next few years” as the government remained “committed to fiscal discipline”.

S&P warned it could lower its rating if further coronavirus lockdowns were required.

Business Council of Australia chief Jennifer Westacott said “jobs are the key to our recovery”, as she called for new business incentives and workplace relations reforms.

Australian Council of Social Service chief Cassandra Goldie urged the government to avoid “wasteful policies” like tax cuts for high-income earners, saying taxpayer funds were better spent on “guaranteed job creation” measures for Australians out of work.

Gerry Harvey said red tape was stifling business and had to be slashed. “The red tape and the greed,” the Harvey Norman chairman lamented.

“It’s just too difficult to get things done.”