Treasurer Josh Frydenberg estimated that there is now some $200 billion sitting on household and business balance sheets as a result of the forced savings of the COVID-19 crisis – and is hoping that the “huge sum of money” will be enough to drive the recovery.
“History will show that as the confidence comes back into the economy after the economic shock that we have received from COVID-19 people will spend that money…some $200 billion that is now on household balance sheets but also business balance sheets, money that was not there in January of last year,” he said.
Mr Frydenberg attributed the savings increase to successive government stimulus packages along with heightened consumer caution and health restrictions that prevented discretionary spending.
“That money is now being spent. We’ve seen a big jump in household consumption, we saw strong retail numbers for the end of last year and we know that the economic recovery is well underway, with 85 per cent of the 1.3 million Australians who either lost their jobs or saw their working hours reduced to zero at the start of the pandemic now back at work,” he said.
However, Australian Small Business and Family Enterprise Ombudsman Kate Carnell has also urged the government to establish a “revenue-contingent loan scheme” for small businesses to provide them with cash flow vital to surviving another 12 months of potential health and border restrictions.
“Unfortunately it’s a perfect storm scenario – especially for those small businesses that haven’t been able to fully recover from the COVID crisis,” Ms Carnell said.
“Access to credit will be critical to keeping those otherwise viable small businesses afloat, particularly over the coming months as support measures are phased out and the bills start flowing in again.”
