Australia will see its biggest deficit since World War Two due to the cost of fighting the coronavirus, it has been revealed.
The country’s treasurer Josh Frydenberg said the year ending 30 June saw the budget in the red by $85.8bn (£48bn) and the 2020/21 year, which began this month, would see this figure balloon to $184.5bn (£103bn).
Net debt is expected to be $488.2bn (£273bn), or 24.6% of GDP at 30 June 2020, jumping to $677.1bn (£379bn), or 35.7% of GDP by mid-2021.
Image: Treasurer Josh Frydenberg said the figures reflect a harsh reality
In a special budget update on Thursday, Mr Frydenberg said the figures “reflect the harsh reality that we find ourselves in”.
Like many countries, Australia brought in strict social distancing rules in mid-March, including the closure of most businesses.
Also in March, the government announced a stimulus package of around $289bn (£162bn) – 14.6% of GDP.
“This necessary and unprecedented level of economic support, coupled with declines in taxation receipts…has significantly impacted the budget position,” Mr Frydenberg said.
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But he added that the initiatives taken by the government, including JobKeeper, a programme similar to the UK’s furlough scheme, “have saved lives and livelihoods”.
Mr Frydenberg said on Thursday that the programme had helped 3.5 million people.
But he expected the unemployment rate to pass 9% by Christmas, despite encouraging signs in some states which have been reopening businesses as they gain some control over the virus.
He said: “We do know that as the economy opens up and restrictions are eased, jobs are being found.”
The New South Wales/Victoria border closed earlier this month, creating long queues for traffic
It comes as Australia’s second-most populous state of Victoria reported five more deaths from the coronavirus, taking the death toll there to 49.
Some 403 new cases were recorded overnight, a day after the state posted its biggest daily increase of 484 new cases.
Two weeks ago Victoria’s largest city of Melbourne was forced into a partial lockdown for six weeks as cases surged.
Face masks are now mandatory for residents outside their homes in metropolitan Melbourne and Mitchell Shire, with those breaking the rules risking a $200 (£112) fine.
Image: Melbourne was forced into partial lockdown earlier this month
Premier Daniel Andrews described the situation as a “public health bushfire”, recalling the state’s devastating bushfires last summer.
He told reporters on Thursday: “People are dying. We’ve all got a stake in this.
“Whatever motivates you – avoidance of a fine, protection of your health or the health of a loved one, or just getting out of this quicker – do the right thing.”
He added that nobody had any excuse not to follow the rules, rejecting claims that some people might not be aware of them.
Source : Sky News