Josh Frydenberg has unveiled a “harsh” economic statement, predicting the Federal Budget will blow out to $184.5 billion in 2020/21 – the largest deficit since World War II – with net debt set to grow to $677.1 billion.
The statement also forecasts:
- Real GDP to fall 3.75% in the 2020 calendar year
- Unemployment will peak at 9.25% in December
- JobKeeper will cost the Budget $85.7 billion over the next four years
- Welfare will add another $16.72 billion in costs over the next four years
However, there were positives in the Treasurer’s speech.
GDP is expected to increase again by 2.5% in 2021, while the labour market is tipped to strengthen next year.
“Our economy has taken a big hit. And there are many challenges we confront. We can see the mountain ahead and Australia begins the climb,” Mr Frydenberg said.
He was backed up by global ratings agency Standard & Poor which reconfirmed Australia’s top AAA credit rating, saying the update reflected their expectation that the economy will begin to recover from recession during 2021.
“We expect the general government’s fiscal balance to improve during the next few years beyond the large deficit being incurred in fiscal 2021, and believe the government remains committed to fiscal discipline,” their report said.
It raises the question we posed on Tuesday – if better times are indeed around the corner, why not invest more money in aged care now? Is the additional cost-fixing simply a rounding error?
