Australia extends stimulus spending as Covid-19 recession looms

SYDNEY • Australia will extend record stimulus spending into next year, the government announced yesterday, outlining multibillion-dollar measures to shield the labour market from the ravages of the rolling coronavirus crisis.

Prime Minister Scott Morrison said supplements to the unemployed and businesses struggling to retain staff would continue until at least end of the year, and likely beyond.

With Australia poised to fall into its first recession in almost 30 years and struggling to tame now double-digit unemployment, the government will increase stimulus spending on two-income support programmes to around A$86 billion (RM258 billion).

The government has already doled out around US$30 billion (RM127.8 billion) to almost one million companies which have seen their turnover slashed.

The money has allowed around 3.5 million staff to be retained, according to government estimates.

Morrison, who dubbed it the “Covid-19 recession”, said the stimulus programme “has saved businesses and it has saved livelihoods”, as he announced measures that would trash his much-vaunted election promise to deliver a budget surplus this year.

In a move to limit the damage to public coffers, he said aid would be slightly less generous and recipients would face tougher requirements to gain access.

Still, Treasurer Josh Frydenberg (picture) 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 roughly five million Australians in the country’s second-largest city Melbourne re-entered lockdown in a bid to stop a new wave of the virus.

Two million Australians lost their jobs or saw hours significantly cut between February and May, and the Melbourne outbreak may compound the crisis.

Australia has detected more than 12,000 cases of Covid-19 and there are currently 3,000 active coronavirus cases in Victoria, the state that includes Melbourne.

AMP Capital Investors Ltd analysts predicted the Melbourne lockdown would mean unemployment is unlikely to fall below 10% before September, when the support programmes is due to elapse.

“Continued income support is essential,” said AMP chief economist Shane Oliver. “Given the likely long tail of high unemployment, it’s likely that income support measures will also have to be extended next year.” — AFP