Australia Faces $143 Billion Debt After Coronavirus
Josh Frydenberg's first budget was a triumphant "back in black" performance but his second is predicted to show a $143 billion black hole in the nation's finances.
The treasurer will deliver a statement on the outlook for the Australian budget on Tuesday, the start of a three-day sitting of parliament, and the day he was supposed to be delivering his 2020/21 budget.
That has been put back to October because of the coronavirus pandemic.
Deloitte Access Economics economist Chris Richardson expects the budget will be in a deficit of $143.1 billion for 2019/20.
That's in stark contrast to the government's predicted surplus of $5 billion at the time of mid-year budget review in December.
Big deficits are also forecast for at least the next three years.
At the same time, Mr Richardson also forecasts the economy contracting by six percent on a year-average basis in 2020/21 with the unemployment rate set to rise to 8.5 percent in that year and not returning to five percent until 2024.
Treasury has already predicted the unemployment rate will spike to 10 percent in the June quarter due to the crisis while economic activity is expected to slump.
And the Reserve Bank said under its best-case scenario, unemployment would still be above six percent by the end of 2022.
The government has spent hundreds of billions of dollars to help shield the nation from the worst of the pandemic.
But Mr Richardson warns rapid budget repair would be "misguided".
"The budgetary damage isn't structural, but the damage to our economy and our jobs would be if we start raising taxes and cutting spending," he says.
Federal Labor described Mr Richardson's Budget Monitor as a "sobering assessment".
Finance spokeswoman Katy Gallagher noted the Monitor warns against the Morrison government's short-sighted "snap back" strategy and highlighted ongoing support will be critical to the recovery.
"There's a whole range of areas where I think we should all roll up our sleeves and have a look at how we can build a better Australia rather than snap back into something that didn't work for some people," she told ABC radio on Monday.
Opposition Leader Anthony Albanese will lay out some of his party's suggestions for how that should happen in a speech to caucus on Monday morning.
He wants to see manufacturing revived, more social and affordable housing, and a focus on rights for workers and more stable jobs.
Funds managers Atlas Advisors Australia suggests the economic hit by an anticipated 85 percent slump in overseas visitors, students and workers could be offset by rejigging visa programs designed to attract business investors.
Its boss, Guy Hedley, points out the small number of places in the business innovation and investment program have already been exhausted for the year, meaning Australia has shut its doors to overseas investors until July at the earliest.