Australian deficit to reach $214bn in next budget as government takes on record debt

6 Oct 20

The next Australian budget will see the government take on record amounts of debt, with treasurer Josh Frydenberg saying he wants to support businesses to keep people in jobs during and after the Covid-19 pandemic.

 

So far the government has, like many others, put unprecedented fiscal stimulus measures in place to try to counter the economic impact of the pandemic.

“We could do this because we entered this crisis from a position of economic strength, brought the budget back to balance for the first time in 11 years and maintained our AAA credit rating,” treasurer Josh Frydenberg said in his budget speech.

“This gave us the fiscal firepower when we needed it most.”

However, he added that the economic response came at “a significant cost”.

The deficit will reach $213.7bn this year, and although it is expected to decrease sharply after the pandemic, it will still sit at $66.9bn by 2023-24.

Net debt will increase to $703bn, equivalent to 36% of GDP, this year, and peak at $966bn, or 44% of GDP, in June 2024.

“This is a heavy burden, but a necessary one to responsibly deal with the greatest challenge of our time,” said Frydenberg.

The treasurer made jobs a key focus of his speech, saying: “There is no economic recovery without a jobs recovery. There is no budget recovery without a jobs recovery.”

He announced a wage subsidy scheme for firms to hire workers aged 16-35 who were previously on unemployment benefits – $200 per week for those aged under 30 and $100 for those aged 30-35.

A $1.2bn programme of investment in apprenticeships and traineeships was also announced, with Frydenberg claiming this will support 100,000 new positions.

He also said more than 11 million Australians would get a tax cut backdated to 1 July.

The budget also includes incentives for private sector investment, boosts to manufacturing in key and strategic sectors, such as food, medical products and the space industry, new infrastructure projects in every state and concessional finance for people buying their first homes.

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