Australian federal finance minister Mathias Cormann has indicated that the government would offer more incentives encouraging businesses to invest and thus hire more workers.
The message came as the nation is bracing for an uphill battle to keep the economic recovery on track as the second wave of COVID-19 causes a sweeping lockdown in Victoria.
Speaking to Seven’s Sunrise program on Aug. 10, Cormann said getting on top of the health crisis in Victoria and getting businesses to invest would be the critical elements in the government’s five-year plan for economic recovery, outlined in the October budget.
“That is key ingredient number one to get the economy going again and beyond that, to get businesses investing into their future wealth and success again, so they start hiring Australians again,” he said. “We want to restore the jobs that were lost, and we want to create new jobs moving forward.”
He indicated that the government would announce more incentives encouraging businesses investment in near future, to complement policies already in place such as asset write-off acceleration.
Cormann also left the door open for further changes to the “JobKeeper” scheme, highlighting the government’s preparedness to responding to the evolving situation.
He said while the current attention is to phase out the fiscal support at an unprecedented crisis level in terms of “JobKeeper”, the government is “prepared to respond to the fact as it emerges.”
Cormann’s message reflects a growing concern that uncertainties surrounding Victoria’s situation is dampening the country’s economic momentum and could lead to an extended recession.
In the updated economic forecast released on Aug. 6 at a press conference, Treasury has also estimated that the stage 3 and 4 Victorian restrictions would wipe $10 billion to $12 billion off the national economy in the three months to Sept. 30.
While 80 percent of the cost relates to the affected areas in Victoria, it also factors in the impact on economic confidence and supply chains in other states.
The “effective” unemployment rate, which takes into account people working zero-hours or dropping out of the labour force, was also revised up to 13 percent from the current 11 percent, which translates to between 250,000 and 400,000 more people losing their jobs.
Speaking at the press conference, Prime Minister Scott Morrison said: “This is a heavy blow, a heavy blow.”
But Morrison noted that it was not unexpected given the situation.
“These measures will have a very significant cost, and it will impact the recovery path, but the task doesn’t change,” Morrison said.
“We band together, and we make this work. And we work together across the country to do the things we need to do, to boost that demand, to encourage that investment, to rebuild our economy, and to go forward,” he said.
NAB data for the week ended Aug. 1 suggests the trend decline in consumer spending triggered by the situation in Victoria has continued. With stage 3 restrictions in effect, spending in the state fell sharply by 5.3 percent – and predates stage 4 restrictions announced on Aug. 2. A broad-based slowdown was also evident in all other states and territories, and all industry sectors.