Australia is to extend record stimulus spending into next year, the government announced yesterday, outlining multibillion-dollar measures to shield the labor market from the ravages of the COVID-19 pandemic.
Australian Prime Minister Scott Morrison said that supplements to the unemployed and businesses struggling to retain staff would continue until at least the end of the year, and likely beyond.
With Australia poised to fall into its first recession in almost 30 years and struggling to tame double-digit percentage unemployment, the government is to increase stimulus spending on two income support programs to about A$86 billion (US$61 billion).
The government has already handed out about A$30 billion to almost 1 million companies that have seen their turnover slashed.
The money has allowed about 3.5 million employees to be retained, according to government estimates.
Morrison, who dubbed it the “COVID-19 recession,” said that the stimulus program “has saved businesses and it has saved livelihoods,” as he announced measures that would scupper his much-vaunted election promise to deliver a budget surplus this year.
In a move to limit the damage to public coffers, he said that aid would be slightly less generous and recipients would face tougher requirements.
Australian Treasurer Josh Frydenberg described the support package as “the largest single economic measure” any Australian government had ever launched and said the hit to the economy was the biggest in at least 100 years.
The announcement came after about 5 million Australians in the nation’s second-largest city, Melbourne, re-entered lockdown in a bid to stop a new wave of COVID-19 cases.
Between February and May, 2 million Australians lost their jobs or saw their hours significantly cut, and the Melbourne outbreak could compound the crisis.
Australia as of yesterday had reported 12,428 cases of COVID-19 and there were about 3,000 active cases in Victoria, the state which includes Melbourne.
Analysts with AMP Capital Investors Ltd predicted that the Melbourne lockdown would mean unemployment was unlikely to fall below 10 percent before September, when the support programs had been due to elapse.
“Continued income support was essential,” AMP chief economist Shane Oliver said. “Given the likely long tail of high unemployment, it is likely that income support measures will also have to be extended next year.”
Victoria Premier Daniel Andrews welcomed the continuation of federal stimulus spending, saying that the local government would likely roll out more economic support measures to those industries struggling in the state.
“Wherever is the greatest hardship will be the greatest degree of support, and I think that is a really important principle,” Andrews said. “In practical terms, it will make a big difference to people knowing that support will be there not until September, but indeed quite some time after that.”
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