Prime Minister Scott Morrison has warned against creating a dependency on COVID-19 support measures as economists urge the government to continue welfare schemes.
The Grattan Institute has recommended the government spend between $70 billion and $90 billion on extra economic stimulus measures.
The International Monetary Fund is calling for a gradual exit from support programs, with public investment to accelerate the recovery.
Morrison says economists vary across the spending spectrum.
“They want us to spend nothing and they want us to spend everything—the truth is going to be somewhere in the middle,” he said on July 2.
He said the government would not let dependence on support stop businesses, and the federal budget, from bouncing back.
“That will cost jobs and livelihoods,” Morrison said.
“The other thing is, we have been incredibly careful not to lock in government spending into the decades into the future. That’s how you swamp the Australian taxpayer unfairly.”
Deloitte Access Economics partner Chris Richardson said the longer outbreaks like the one in Melbourne last, the more would need to be spent.
He said it was important unemployment benefits were higher than the pre-coronavirus level of $40 a day.
“Because it’s all changing so fast, we will have more people dropping through more cracks.”
Morrison is confident Australia’s economy will become independently strong again, fuelling job growth.
“The future of the Australian economy is not to remain in ICU,” he said.
“In the meantime, the government will continue to do what is necessary to support us to get to that stage.”
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