The coronavirus pandemic is expected to give Australia its largest budget deficit since World War II.
After almost three decades of economic growth, the budget deficit is now expected to reach $184.5 billion in the new fiscal year.
As Finance Minister Mathias Cormann put it: “We know why we’re here. We know that these numbers are the result overwhelmingly of the impact on our economy [by] the coronavirus pandemic.”
Though necessary, the additional spending in the form of a $289 billion stimulus helped push the deficit over the edge. The stimulus was passed in order to support workers and businesses through the economic fallout of the pandemic. Australia’s debt levels are an ongoing casualty of the virus.
Further complications may be on the horizon, as some of the governmental support packages, including JobKeeper and JobSeeker, are scheduled to end in October. With Australia’s official unemployment rate expected to rise from its current rate of 7.4% to a peak of 9.25% by Christmas, many hope that future stimulus packages will be considered.
Meanwhile, other initiatives such as lowering the tax take could provide further relief. One such plan is forecasted to boost the country’s gross debt to $851.9 billion by 30 June 2021 – but proponents believe that these numbers are best understood in a wider context.
“Even after all of this additional expenditure, our debt levels are still lower than the debt levels of many other countries before they went into the coronavirus period. So, we do have fiscal capacity to continue to respond,” Minister Cormann added.