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Grattan urges government to consider extra stimulus to accelerate recovery

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
21 October 2020 1 minute readShare
Grattan urges government to consider extra stimulus to accelerate recovery

The government’s COVID recovery plan has been characterised as “unreasonable”, with the Grattan Institute accusing the Treasurer of obscuring the truth on budget night and urging him to consider another $50 billion in stimulus to speed up growth. 

While Josh Frydenberg did say that his 2020 budget is “all about jobs”, the Grattan Institute has accused the Treasurer of failing to relay the planned speed of recovery. In fact, the institute has deduced that the COVID recovery will be the slowest in Australia’s history, as far as unemployment goes. 

“You would be forgiven for expecting the recovery from this recession to be faster than the recoveries from previous recessions. Previous recessions haven’t involved the government requiring businesses close their doors,” the Grattan Institute’s senior associate, Matt Cowgill, and household finances program director Brendan Coates said.


While conceding that the government isn’t able to just switch things back on, the Grattan Institute explained that Australia’s recovery from this COVID recession will be on the “sluggish side”.

By comparing the unemployment rate’s planned average decline over the next few years and the scenario witnessed during the 1990s recession, the Grattan Institute gave evidence for its theory.


Mr Cowgill and Mr Coates explained: “The budget expects the unemployment rate to peak at 8 per cent in December this year, but then take three-and-a-half years to fall to 5.5 per cent by mid-2024. That’s an average decline of 0.71 [of a percentage point] per year in the unemployment rate.

“In the 1990s recession — Australia’s most recent major recession — the unemployment rate peaked at 11.1 per cent in late 1992, then fell to 8.3 per cent by 1996. That’s an average decline of 0.9 [of a percentage point] per year — a good deal faster than expected after this recession.”

The pair deduced that extra stimulus of about $50 billion, over and above what was announced in the budget, would be needed to drive unemployment down to 5 per cent, a result that would kickstart wages growth nearly two years ahead of the government’s schedule.

“Some may appear in upcoming state budgets, but there’s no doubt the Treasurer has more work left to do,” Mr Cowgill and Mr Coates said.



“Every year that unemployment remains too high is another year that Australians can expect close to zero real wages growth, and another year that Australians young and old will continue to confront a dearth of job opportunities.”

Grattan urges government to consider extra stimulus to accelerate recovery
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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