Treasurer Josh Frydenberg and Finance Minister Mathias Cormann delivered an update on Australia’s economic and fiscal outlook in the wake of the COVID-19 pandemic.
They revealed that the budget deficit for financial year 2019/20 was A$85.8 billion ($61.2 billion).
The deficit is projected to grow to A$184.5 billion in 2020/21.
Australia’s debt will grow to A$677.1 billion, more than a third of the GDP by June 30, 2021.
However, Frydenberg said that the burden was “manageable” on account of record-low interest rates.
“Australia is experiencing a health and economic crisis like nothing we have seen in the last 100 years,” he told reporters on Thursday.
“Our economy has taken a big hit and there are many challenges we confront. We can see the mountain ahead and Australia begins to climb. We must remain strong.
“We will get through this and we will get through this together,” the Treasurer added.
The government has delayed announcing the Federal Budget for 2020/21 until October on account of the pandemic.
According to Treasury projections, Australia’s unemployment rate will be above 9 per cent by the end of calendar year 2020, up from 7.4 per cent in June, while the GDP will fall 3.75 per cent in 2020.
“These harsh numbers reflect the harsh reality we face,” Frydenberg said.
“How we manage future cases of coronavirus will be absolutely key to the economic recovery, both the speed and trajectory.”
According to an official update, the government has acted to provide economic support for workers, households and businesses of around A$289 billion or the equivalent of 14.6 per cent of the GDP, including about A$86 billion for the “JobKeeper” wage subsidy scheme.
Frydenberg said that the measures saved 700,000 jobs.
“Without the government’s economic support, unemployment would have been 5 percentage points higher,” he said.
Income from tax fell A$31.7 billion in 2019-20 and are expected to fall a further A$63.9 billion in 2020/21.
“We are in a challenging position, there is no sugar coating this. We did what we had to do given the economic fallout of this one in a hundred year pandemic,” Cormann said.