Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 29 May 2020
As we have made clear for some time, the COVID-19 pandemic is having a negative impact on our Budget bottom line both because of the negative impact of this health crisis on economic parameters and the fiscal impact of the policy decisions required to support Australians through this period.
The Government is helping to keep businesses in business, Australians in jobs and to support those who lost their job with $259 billion or 13.3 per cent of GDP announced in total economic support.
As a Government we committed to the fight against the virus and to building the economic bridge to the other side.
As a result of the concerted effort of all levels of government and all Australians the health situation is much better today than we had feared, though we need to remain vigilant.
As a result the economic impact of the health crisis is less bad than we had feared when preparing for the worst.
The fiscal impact of our historically significant support measures is also temporary, limited to the 2019-20 and 2020-21 financial years and is not baking material structural burdens into the Budget bottom line beyond that period.
Nevertheless, the April Monthly Financial Statements reflect both the impact of the current economic impact of the coronavirus pandemic on both revenue and payments as well as the fiscal impact of the additional economic support measures we have put in place since MYEFO 2019-20.
Total payments to the end of April 2020 were $12 billion higher than assumed in the 2019-20 MYEFO profile.
These include payments through a range of measures including:
- Boosting cash flow for employers
- Economic stimulus payments – a one-off $750 stimulus payment to pensioners, social security, veteran and other income support recipients and eligible concession card holders
- National Medical Stockpile – Purchase of Masks, Other Personal Protective Equipment and Pharmaceuticals;
- National partnership agreement on a joint COVID-19 public health response; and
- Partnership with private health sector to ensure viability and capacity during the COVID-19 response.
The impact of the pandemic on government revenue as a result of related economic parameter variations also remains significant, with receipts nearly $20 billion lower than the 2019-20 MYEFO profile.
This is driven by below profile collections across both income and indirect taxes.
The underlying cash balance for the financial year to 30 April 2020 is a deficit of $40 billion instead of a deficit to that point of $7.6 billion in the 2019-20 MYEFO profile.
The Government remains committed to supporting Australians as we work towards maximising the strength of the economic recovery.
The Government is now actively working to develop and implement the framework to enable the economy to bounce back strongly on the other side.
The Government will also provide an economic and fiscal update in June following the release of the March quarter National Accounts and the 2020-21 Budget will be delivered in October.