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Newcastle Herald
Newcastle Herald
National

Virus costs send budget orthodoxy out the window

Treasurer Josh Frydenberg and Prime Minister Scott Morrison.

THE society-wide impact wrought by the coronavirus means that tonight's federal budget is of more than usual importance, both for Australia as a whole, and for the Morrison government, as it attempts to shepherd the nation through this unprecedented and unpredictable pandemic.

Normally held in May, the budget was pushed back to tonight after an economic and fiscal update was released in July.

The situation has worsened since then, with analysts expecting a deficit of more than $200 billion and gross government debt of about $1 trillion.

Given the Coalition's history of lecturing Labor on the profligacy of "debt and deficit" budgets, some will see an irony in the government's adoption of the same measures.

But these are anything but ordinary times.

Around the world, governments are facing essentially the same equation - costs way up, tax revenues way down - leading to an almost uniform resolve to borrow where possible to protect their economies, with little or no talk of the "austerity" programs that followed the Global Financial Crisis.

Tonight's budget will contain billions in infrastructure funding - including major contributions to the Newcastle and Singleton bypass projects - and the government has foreshadowed new employment subsidies as well as the continuation of the JobKeeper and JobSeeker programs.

It is also expected to bring forward a series of tax cuts, putting extra money in millions of pockets - money the government hopes that people will spend.

Some of this money will undoubtedly go on daily living.

But those with the ability to save are just as likely to salt the money away, especially as travel restrictions, for starters, limit the sorts of things that wealthier consumers can spend their spare cash on.

It might be a statement of the obvious, but there is no chance of restoring the national and global economies until COVID-19 is brought under control.

Even with Victoria's second wave, Australia is still doing better than many countries when it comes to coronavirus.

If the global search for a vaccine succeeds in the coming months, then tonight's budget might be something of a one-off.

But without a vaccine, the condition of an already ailing global economy must surely worsen, meaning even bigger deficits and greater debt, in 2021.

ISSUE: 39,431.

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