Acknowledging the dangers of the new end-of-March economic cliff on Thursday, Treasurer Josh Frydenberg compared the level of support provided by the federal and state governments during the COVID-19 crisis, noting that the federal government has done “the heavy lifting”.
But having provided a stepping stone to bypass the September economic cliff by extending JobKeeper and JobSeeker, the government has essentially prolonged the inevitable to March.
Asked on Thursday what the government’s plans beyond March are, the Treasurer hinted that the federal government could pass the baton to the states.
“Some $570 billion has been committed by the government, both in terms of balance sheet support and direct fiscal support. That’s the equivalent of 26 per cent of GDP,” Mr Frydenberg said in Canberra on Thursday.
“In contrast, you’ve got the states, who have committed some $65 billion, around just 3 per cent of GDP.
“We’ve done the heavy lifting, and we are obviously seeing the benefits of those support packages.”
Addressing the predicted spike in unemployment early next year, as the first phase of the extended JobKeeper is wound down on 3 January, the Treasurer alluded to the Mid-Year Economic and Fiscal Outlook (MYEFO).
“With respect to next year, we printed in the budget what we thought would happen to unemployment. The expectation is it could go up before the end of the year to around 8 per cent and obviously we’ll have more to say to that in the lead-up to MYEFO,” Mr Frydenbergy said.
“But then next year, it will come down to about 7.25 per cent, by mid next year come down to 6.5 per cent the year after, and lower after year after that.”
He refused to reveal how the government plans on reducing unemployment when supports keeping businesses and individuals afloat are stripped away.
He said: “We’re providing additional support to the Australian economy. These measures, for example, with the JobMaker hiring credit that passed the Parliament last night, are going to provide up to $200 per week to an employer to take on a younger person who has been out of work.
“450,000 jobs is what it’s going to support.”
Addressing claims that JobMaker will make it harder for people over 35 to find employment, the Treasurer turned to the government’s other wins, including personal income tax cuts.
“The key point to understand is the JobMaker hiring credit is one of a series of economic supports that the government has put in place. We’ve already passed through the Parliament and legislated tax cuts for more than 11.5 million Australians,” he said.
“We’ve got the loss carry-back measure, we’ve got the expanded instant asset write-off measure, we’ve got the support for businesses to take on new apprentices, some 100,000 new apprentices, by providing up to a 50 per cent wage subsidy.”