Treasurer Josh Frydenberg has outlined the government’s reform agenda while warning that a second wave of infections could be disastrous for the economy.
In a ministerial statement delivered to the House of Representatives in lieu of a budget, Treasurer Frydenberg sketched out the government’s plans for recovering from a crisis that has so far caused a 10 per cent contraction in GDP and sent unemployment skyrocketing.
“The proven path for paying back debt is not through higher taxes, which curtails aspiration and investment, but by growing the economy through productivity-enhancing reforms,” Mr Frydenberg said. “Our focus will be on practical solutions to the most significant challenges which will be front and centre in the post-crisis world.”
That will involve reskilling and upskilling the workforce, maintaining its $100 billion infrastructure pipeline, “cutting red tape” to reduce the cost burden on businesses, and industrial relations reform “as a means of increasing our competitiveness”.
But the Treasurer was silent on the issue of the JobKeeper and JobSeeker payments, which have faced criticism that they will not be able to alleviate the post-COVID unemployment crisis, and did not comment on Deloitte’s estimates of a $143 billion deficit as a result of the government’s successive stimulus packages.
“While there will be a significant increase in government debt which will take many years to repay, our measures have been designed in a way that [protects] the structural integrity of the budget,” Treasurer Frydenberg said. “Australians know there is no money tree. What we borrow today, we must repay in the future.”
Treasury is currently estimating that the lifting of restrictions in three stages will see 850,000 people back at work, with GDP increasing by $9.4 billion for each month that restrictions are lifted, but Treasurer Frydenberg warned that a second wave of COVID-19 infections could see a loss to the economy of $4 billion per week and urged Australians to follow medical advice.
“This is the economic cost we will all bear if we fail to act,” Treasurer Frydenberg said.