Budget deficit the ‘biggest’ since WWII

THE largest budget deficit Australia has seen since World War II will be revealed on Thursday in a grim economic statement revealing the shattering impact of the COVID-19 pandemic.

It is predicted to be about $200bn in the red, well above the razor-thin surplus touted even just six months ago and four times the deficit during the global financial crisis.

Net debt will be pushing $500bn, saddling future generations with paying for the crisis. The Victorian second wave shutdown will cost the economy $3bn alone, according to the federal economic update to be released on Thursday.

More than $289bn has been dumped into stimulus measures over two years to keep Australians working, with government estimates saying it has saved 700,000 jobs.

But while expenses are rising, company tax receipts will be down $25bn by 2020-21.

There is one shining light with mining investment expected to increase for the first time in seven years, up 4 per cent in 2019-20 and almost 10 per cent the year after that.

Treasurer Josh Frydenberg will unveil the economic statement, detailing forecasts for unemployment, debt, deficit and more for the next two years.

“The COVID-19 pandemic is a once-in-a-century shock that is placing immense pressure on health systems and economies all around the world,” he said. “Our announced measures, together with large declines in taxation receipts, has seen a hit to the bottom line, but this has been necessary in order to cushion the blow for millions of Australians, and to keep businesses in business and keep Australians in jobs.”