One in 10 Australian workers will be unemployed by Christmas the Morrison Government has predicted in a grim COVID-19 forecast.
Warning the world faced the most significant economic challenge since the Great Depression, Treasurer Josh Frydenberg has revealed the nation now faces an $850 billion debt bomb that will take decades to repay.
But he’s reassured voters that the nation’s debt-to-GDP ratio remains much better than other comparable countries.
However, the jobs outlook remains grim with thousands to join the unemployed queues.
“The jobs market will take time to recover with the unemployment rate forecast to peak at 9.25 per cent in the December quarter 2020,” Mr Frydenberg said.
“Beyond 2020, labour market conditions will strengthen but it will take some time for the unemployment rate to decline.
“There remains significant uncertainty around global and domestic recovery.
“We’re not out of the woods yet.”
Despite the grim outlook, the Treasurer said the rise in unemployment triggered by the virus outbreak could have been a lot worse.
“Without the Government’s support unemployment would be 5 per cent higher. The Government’s actions have saved 700,000 jobs,” he said.
Mr Frydenberg shared the jobs outlook in an economic outlook update that shows Australia’s budget deficit will hit the $184 billion mark this financial year, in the biggest blowout since World War II.
Just months ago, he had hoped to hand down the first budget surplus in Australia in years.
As pandemic lockdowns deliver a once in a century hit to tax revenues, he has also confirmed the 2019-20 budget deficit – the difference between the government’s revenue and outlays in that year is $85.8 billion.
“These harsh numbers reflect the harsh reality we face the economic outlook remains very uncertain,” Mr Frydenberg said.
“Recent events in Victoria are a testament to this, a painful reminder, how a setback in combating the virus can impact the speed and the trajectory of our national economic recovery.”
The good news, according to the Treasurer, is that some jobs are recovering strongly in those states where COVID-19 has been suppressed and the economy is reopening,
“Restrictions are being eased as they effectively manage the coronavirus. So last week’s job numbers, where 210,000 people found a job, 60 per cent of whom were women, 50 per cent of whom were young people, was double what the market expected.”
Labor’s treasury spokesman Jim Chalmer said the Morrison Government had to stop the excuses and come up with a plan to create jobs.
“These are dark days and confronting numbers in the budget update today,’’ he said.
“We now know the government expects 240,000 Australians to lose their job between now and Christmas. Now, Australians already knew that things were grim, when it came to jobs in the economy, but what they desperately wanted to hear today from the government was a plan with how to deal with that unemployment.”
Those figures reflect the $289 billion that the Morrison Government has dropped on stimulus measures including direct payments to people on welfare, increases to JobSeeker and the JobKeeper wage subsidy.
But it’s the debt levels that have blown out to a stunning $840 billion as the Prime Minister and Treasurer were forced to borrow more money to pay for those measures and were hit by lower tax revenues.
Mr Frydenberg said that Australia continues to have a low debt to GDP ratio compared with other countries.