Australian gov’t announces budget with ‘ heavy burden’ expected
The Australian government announced the budget for financial year 2020/21 on Tuesday with increased deficit and debt expected as “heavy burden” along with the recovery plan to take the country out of its first recession since 1991. Treasurer Josh Frydenberg said in a budget speech on Tuesday evening that the government’s economic response including cushioning the blow amid the COVID-19 pandemic and helping Australians remain in work “has come at a significant cost.” According to his speech, the Australian economy is forecast to fall by 3.75 per cent this calendar year and unemployment to peak at eight per cent in the December quarter. According to the budget, the deficit reach AU$213.7 billion (FJ$322.97bn) this financial year, falling to AU$66.9 billion (FJ$101.10bn) by 2023-24.
Net debt will increase to AU$703bn (FJ$1,062.47bn), or 36 per cent of gross domestic product (GDP), this financial year and peak at AU$966bn (FJ$966bn), or 44 per cent of GDP, in June 2024. On the budget, the Australian Broadcasting Corporation reported on Tuesday that both debt and deficits “are set to hit record highs as coronavirus savages the economy.”
“This is a heavy burden, but a necessary one to responsibly deal with the greatest challenge of our time,” said Mr Frydenberg. He said the budget “is all about jobs” and the economic and fiscal strategy of the government has two phases, with first of which focusing on boosting consumer and business confidence, growing the economy and creating jobs. “Once the recovery has taken hold and the unemployment rate is on a clear path back to precrisis levels, comfortably below 6 percent, we will move to the second phase where there is a deliberate shift from providing temporary and targeted support to stabilising gross and net debt as a share of the economy,” he said. The treasurer also introduced the government’s economic recovery plan, which includes a new JobMaker hiring credit to encourage businesses to hire younger Australians, record investments in skills and training, kick-starting investment with the incentives and infrastructure investment to drive jobs.