Australia counts cost of Covid

ISSUES: POPULATION GROWTH STOPS, BUDGET DEFICIT

Stimulus programme will keep country in debt until at least 2060.

Australia faces stalled population growth and budget deficits until at least 2060 as a result of emergency Covid-19 measures, the government warned yesterday.

The decision to slam shut its borders at the start of the pandemic, combined with lower fertility rates, mean slow population growth that will weigh on the economy, according to the 2021 Intergenerational Report.

A vast stimulus spending programme launched last year, which saw the government pump billions into the economy to avert a full-blown depression, will help keep the budget in deficit until at least 2060.

“This outlook has been profoundly affected by the pandemic, which has caused the most severe global economic shock since the Great Depression,” the report says. “While Australia’s economic recovery is well advanced, some effects will persist for years.”

New coronavirus cases popped up in cities across Australia yesterday, prompting local authorities to impose restrictions in areas not used to living under strict Covid-19 rules.

Australia has been broadly successful in containing virus clusters, but is now battling flareups in at least four cities. Brisbane, Darwin, Perth and Sydney have all reported new cases of the highly contagious delta variant.

Australia’s population growth has plummeted to its lowest levels in more than a century after it sealed itself off from the rest of the world at the start of the pandemic.

The nation’s economic growth has been fuelled by several waves of mass migration from Europe, Asia and beyond. But with migration not expected to return to pre-pandemic levels until 20242025, the report predicts Australia’s population of 25.7 million will not grow to 38.8 million until 2060 – six years later than previously forecast.

Economic shutdowns to curb the spread of the virus sent Australia tumbling into recession as whole industries ground to a halt. Huge government borrowing to fund economic stimulus plunged the national budget into deficit, where it is now predicted to stay for decades. –