At the end of 2019, Treasurer Josh Frydenberg took to his feet in Parliament House to address an un-socially-distanced press pack on the Mid-Year Economic and Fiscal Outlook (MYEFO).
He told them the Government would prevail in its quest to deliver a long-promised budget surplus of $5 billion in the 2019-20 financial year.
But within weeks, the coronavirus would become headline news, relegating the promise to the trash heap.
Today's update shows a deficit of $85.8 billion is estimated for the 2019-20 financial year.
The deficit in the current financial year is estimated to be more than twice as large, clocking in at $184.5 billion.
Debt will grow
With deficits, naturally, come debt.
Australia's net debt levels will increase substantially as the Government borrows money to keep the country afloat during the coronavirus pandemic.
The estimated net debt for the 2019-20 financial year has increased nearly $100 billion from where it was in December's MYEFO.
In the current financial year, net debt is expected to reach $677 billion.
But Mr Frydenberg said Australia's net debt as a proportion of the total economy was more manageable than other parts of the world.
"Our net debt ratio is much lower than other countries," he said.
Tax receipts are down
In simple terms, Governments incur a deficit when they spend more than they collect in revenue.
Tax is by far the largest source of that revenue and the Government has taken a substantial hit on that front as companies and individuals earn less money and pay less tax in a slowing economy.
In 2019-20, the Government is missing out on $33 billion it was expecting in tax revenue, and in 2020-21, it will rake in $63.9 billion less than it was initially expecting.
So, the Government has less money to spend but at the same time ...
Government payments are up
Earlier this week, the Federal Government extended two of the largest support measures introduced in the wake of COVID-19: JobKeeper and the JobSeeker coronavirus supplement.
JobKeeper has been credited with keeping millions in work, but it's come at a cost of $86 billion.
All up, Government payments are forecast to be $187.5 billion more than was planned over two years under MYEFO, with more than half of the extra cost incurred this financial year.
"The impact of the coronavirus has led to a significant decline in tax receipts and a large increase in government payments," he said.
"These harsh numbers reflect the harsh reality we face. The economic outlook remains very uncertain. Recent events in Victoria are a testament to this."
The economy will shrink
The coronavirus-induced recession will see Australia's economy shrink in 2019-20 and 2020-21.
The December outlook had Australia continuing its record of uninterrupted economic growth for the period.
But today's update shows Australia recording negative growth in both 2019-20 and 2020-21.
In calendar year terms though, the Government expects that Australia will return to growth in 2021 after a steep contraction of 3.75 per cent.
Adding to the economic concern are warnings the official unemployment rate will hit 9.25 per cent before the end of the year.
It currently sits at 7.4 per cent but the Government says the true rate of people out of work is currently closer to 11 per cent.
Australia could be doing worse
The Government is keen to point out that while Australia's economy will contract, the pain will be less than in other comparable advanced economies.
Treasury is forecasting that China will avoid a whole calendar year of negative growth, while other trading partners the US, India and Japan are all forecast to see greater losses than Australia.
"We are in a better, stronger, more resilient position than just about any other country around the world and that gives us a very strong foundation from which to build the recovery on the other side," Mr Frydenberg said.
https://news.google.com/__i/rss/rd/articles/CBMiZmh0dHBzOi8vd3d3LmFiYy5uZXQuYXUvbmV3cy8yMDIwLTA3LTIzL2ZlZGVyYWwtZ292ZXJubWVudC11cGRhdGUtb3V0bG9vay1lY29ub21pYy1jb3JvbmF2aXJ1cy8xMjQ4NTIwNNIBJ2h0dHBzOi8vYW1wLmFiYy5uZXQuYXUvYXJ0aWNsZS8xMjQ4NTIwNA?oc=5
2020-07-23 08:00:00Z
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