Australian Treasurer Josh Frydenberg gave a “sobering” account of the economic damage the nation has sustained from the CCP virus, revealing some of the worse deficits on record.
In a ministerial statement on what was meant to be the federal budget day, Frydenberg said that the Australian economy is set to drop $50 billion in the June quarter.
The complete 2020-21 budget analysis has been pushed back to Oct. 6, as the government consolidates the financial costs of the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus.
Australia is predicted to experience a 10 percent drop in GDP in the June quarter—a record fall—while the global economy is predicted to contract by 3 percent this year, surpassing the decrease seen during the 2009 Global Financial crisis.
China, Italy, France, and Spain have all experienced their biggest quarterly falls on record this year so far.
Social distancing orders, restrictions on non-essential workers, and stand-downs have stifled cash flow. Over the next three months, unemployment is estimated to rise by 5 percent, and within the June quarter, it is expected to hit 10 percent overall, which is 1.4 million people.
“In April, surveys showed that job ads halved and activity in the construction, manufacturing and the services sector had their largest ever monthly falls,” Frydenberg said.
The aviation industry has been severely impacted since Australia closed its borders to China on Feb. 1, and banned all other overseas travel on March 24. Domestic and international air travel is down by more than 97 percent.
The most noticeable difference was seen at Brisbane airport where at least 30,000 passengers passed through “on Easter Sunday last year, compared to just 31 passengers this year,” Frydenberg said.
One of the biggest airline companies Virgin Australia went into administration on April 21. Also, Qantas Airways, the flagship carrier of Australia, stood down 20,000 staff in March due to decreased revenue.
Greens senator Peter Whish-Wilson called for the government to invest in infrastructure, clean energy, and communities.
“Our economy is a money tree. If you water it, it will grow,” he told parliament.
Building Bridge to Recovery Phase
On May 8 the national cabinet agreed on a three-stage “roadmap” to a “COVIDSafe” Australia, which will see states and territories ease restrictions at their own pace, with all reaching step three by July.
The treasury estimates that by just stage one being lifted across all states and territories it will lead to more than 250,000 people going back to work, and the GDP will see a boost of at least $3 billion (US$1.9 billion).
He went on to explain that “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 per week to the economy,” he said.
Victoria has been the last state to ease restrictions. Premier Daniel Andrews announced that from May 13 Victorians were allowed to visit friends and family with gatherings of up to 10 people outdoors, and 5 in homes.
Schools are scheduled to open in Victoria in early June.
Opening schools will help pump $2.2 billion into the Australian economy.
“The relaxation of travel restrictions is expected to contribute around $700 million,” Frydenberg said.
By the time all states and territories reach the third stage of the progressive reopening the economy will be growing by $9.4 billion a month and 850,000 more Australians will be back in work.
“Our ability to handle this crisis has once again reminded Australians of the importance of a strong and stable financial position which must always be a primary responsibility of government,” the treasurer said.
Frydenberg Gets Tested After Coughing Fit
Frydenberg coughed several times during a parliamentary speech about Australia’s economic situation on May 12 and later sought the advice of a deputy chief medical officer. He was tested for COVID-19, and the results came back negative this morning.
Yesterday I was tested for COVID-19 out of an abundance of caution on the advice of the Deputy Chief Medical Officer. This morning I received the result of the test which was negative.
— Josh Frydenberg (@JoshFrydenberg) May 12, 2020
Shadow treasurer Labor’s Jim Chalmers said it was clear coronavirus was a “diabolical pandemic with devastating economic consequences”.
“Yet all we got today is a cut and paste of what the government has already said and what Australians already knew,” he told parliament.
“If only the treasurer had coughed up some detail or a plan.”