Going Back Into Lockdown To Deal With New Outbreaks Will Cost $4B A Week, Treasurer Warns
Having to reapply coronavirus lockdowns due to new outbreaks could cost Australia $4 billion a week, treasurer Josh Frydenberg said in a COVID economic statement.
The effects of coronavirus will see unemployment hit 1.4 million, and have tanked house sales by 40 percent, worrying economic stats from Frydenberg revealed.
The treasurer gave an anticipated update in Parliament House on Tuesday, the first official parliamentary statement on the bruising effects of coronavirus on the federal budget. In a normal year, Tuesday -- the first week of May -- would mark the annual federal budget, but that has been postponed to October, with parliament resuming as normal.
Frydenberg warned there would be a years-long economic hangover from both the direct effects of the virus and the government's unprecedented cash injection to keep the economy afloat. He said the federal cash deficit in March -- before the effects of coronavirus truly exploded -- was $22.4 billion, already $10 billion higher than forecast, and is expected to go much higher, potentially to record levels.
"The unprecedented scale and speed of the government's economic response has driven a rapid increase in borrowings," he said, warning of "a significant increase in government debt, which will take many years to repay".
"Australians know there is no money tree. What we borrow today we must repay in the future."
Frydenberg said the budget measures had "been designed in a way that protect the structural integrity of the budget", and spoke of Australia's relatively good response to the virus outbreak. But while new cases of coronavirus have dwindled to zero in many parts of the country, warnings from health experts against complacency and fears of a "second wave" of infections were also backed by the treasurer.
Frydenberg said the reopening of some businesses and easing lockdown restrictions were predicted to boost the economy by $9.4 billion per month between now and July, but warned of the opposite impact if the virus again broke out.
"These improvements in the economy depend on us continuing to follow the health advice. Failing to do so could see restrictions re-imposed at a loss of more than $4 billion a week to the economy," he said, detailing that NSW alone would be hit by $1.4 billion per week if restrictions had to be clamped back on.
"This is the economic cost we all have to bear if we fail to act."
Unemployment is tipped to spike above 10 percent, representing some 1.4 million Australians, with a five percentage point bump in April alone. However, treasury projections state that up to 850,000 people could be back at work once the three-stage "roadmap" unveiled last week by Prime Minister Scott Morrison is fully realised.
The treasurer battled a coughing outburst midway through his speech, temporarily appearing to lose his voice before chugging from a bottle of water. Later on Tuesday, he issued a statement to say that "out of an abundance of caution" he had undergone a coronavirus test, and would isolate to await results.
He also shared a laundry list of heavy impacts on various parts of the national economy. Frydenberg said household consumption was projected to be down 16 percent, business consumption by 18 percent.
He said job ads had dropped by 50 percent nationally, industries like construction and manufacturing saw their largest ever drops in activity, new car sales fell 48 percent, house sales fell by 40 percent, and air travel plummeted 97 percent -- noting stats that some 40,000 people travelled through Brisbane Airport over the 2019 Easter weekend, while just 31 did this year.
Frydenberg said more than 33 percent of jobs were lost in the accommodation and food sectors, with arts and recreation jobs cut by 27 percent.
"The coronavirus has created a one in a 100-year event. A health and economic shock the likes of which the world has never seen. So many of our fellow Australians through no fault of their own are struggling and doing it tough," he said.
"But, once again, Australia and its people are showing remarkable resilience and character. Having withstood fire, flood and drought there is a unity of purpose that should make us all proud."