This evening, the Morrison government will release the budget for the year 2020-21, which Prime Minister Scott Morrison has billed as “one of the most important, if not the most important, since the end of the Second World War.”
The government had previously looked at delivering a budget that would put the government back in surplus, but given the coronavirus pandemic and its resulting recession, this has now reportedly been replaced by a budget that will increase spending to ensure economic activity stays buoyant.
Speaking at the National Press Club late last week, Mr Morrison said: “This year, the global economy is forecast to contract by around four and a half per cent. The world economy during the GFC declined by 0.1 per cent. So, in simple terms, the economic contraction we’re expecting this year in the global economy is 45 times greater than the GFC.
“The scale of what is occurring today is incredibly sobering.
“Never before have we experienced a global recession of this magnitude in a truly modern, interconnected world and global economy, no longer insulated by geography and old technology. Global recessions now occur in real time,” he said.
Mr Morrison continued: “So, this budget will be necessarily different in scale to those we have seen in many generations. It will respond responsibly to the challenge of our time and consistent with the principles that we laid down at the outset of the pandemic back in March.
“The budget will confirm the strong plan we have to recover from the COVID-19 recession and to build our economy for the future. To cushion the blow of the pandemic recession. To recover what’s been lost – the jobs, the livelihoods, the hours, the incomes, the customers, the clients.
“But importantly, to take new ground by rebuilding our economy for the future.
“And we’ll do this, importantly, while honouring our guarantee to the essential services that Australians rely on – the schools, hospitals, Medicare, aged care, disability services.
“And we’ll do it while keeping Australians safe. And we’ll do it without increasing taxes.
“That’s what the 2020-21 budget is all about.”
He continued: “There are further risks; there are further challenges ahead; there are further unknowns. We are not through this yet, not by a long shot. And there is still much more to be done. And we are rebuilding our economy for the future.”
In this evening’s budget, the government is expected to announce further details around how it intends to bring the Australian economy out of its first recession in nearly 30 years, focusing on manufacturing, infrastructure, agriculture, JobMaker support and the digital economy, among many other initiatives.
The government is also expected to announce a swathe of tax cuts in a bid to get Australians spending their saved money into the economy.
However, Mr Morrison was hesitant when asked how he would ensure Australians would spend, instead of save, this money.
Speaking to journalists at the National Press Club, Mr Morrison said: “I never tell people what to do with their own money.
“When you’re talking about income tax cuts, they’re just getting to keep more of what they earn. In these times we have seen, particularly when it comes to retail and household items, we have seen quite extraordinarily an increase in response in those areas, and that has responded to the aggregate demand stimulus we have put into the economy,” he said.
“But I’m not going to get into an edict to Australians on how they should spend their money. There’s plenty of people out there who want to tell people how to spend their money, but the Liberal and National parties are not two of those organisations.”
The budget will be announced at 7.30pm today (Tuesday, 6 October).
[Related: Economy officially in recession as GDP sinks]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.