Paul Osborne
(Australian Associated Press)
WHAT TO EXPECT IN JULY ECONOMIC AND FISCAL UPDATE?
THE CONTEXT
* Border controls put back in place following NSW and Victorian outbreaks of coronavirus, and continued ban on overseas travellers, will impact on the budget and economy
* Most states and territories are recovering as COVID-19 caseloads have been zero or in single figures for some time
* But Reserve Bank governor Philip Lowe says: “We have handled the health crisis better than many other countries and our economy is also faring better than many others.”
* JobKeeper wage subsidy and JobSeeker dole payments have been keeping households and businesses afloat
* Popular scheme launched on April 20 to allow the withdrawal of up to $10,000 from superannuation in the previous financial year and a further $10,000 in 2020/21
* Small and medium-sized businesses have been offered unsecured loans of up to $1 million, with the second phase of the scheme open until June 30, 2021
* The government has announced a skills and apprentices scheme worth $2.5 billion
* Total support package spend is $259 billion or about 13.3 per cent of GDP
* As well, the banks are allowing repayment deferrals, rent has been deferred in many cases and insolvency laws have been eased
WHAT COULD BE UNVEILED?
* A budget deficit of around $200 billion for 2020/21, as the cost of extending JobKeeper rises from $70 billion to $86 billion and extending the boosted JobSeeker payment adds $3.8 billion
* Higher federal debt levels for an extended period
* Rising unemployment
* Income tax cuts, which were due to start in 2022, brought forward to 2021
THE EARLIER FORECASTS
* MYEFO (December 2019) forecasts for 2020/21:
Budget surplus $6.1 billion
Real GDP 2.75 per cent
Nominal GDP 2.25 per cent
Employment growth 1.75 per cent
Unemployment 5.25 per cent
Wages 2.5 per cent
CPI 2.25 per cent
TREASURER’S ECONOMIC STATEMENT IN MAY
Unemployment 10 per cent in the June quarter
GDP to fall by over 10 per cent in the June quarter
Debt heading above $618 billion
