Federal Economic and Fiscal Update – July 2020

This week Regional Capitals Australia noted the Economic and Fiscal Update delivered by Federal Treasurer, the Hon Josh Frydenberg, MP and the Minister for Finance, Senator the Hon Mathias Cormann.  The update indicated the impact of the COVID-19 pandemic on Australia’s economy.

The Treasurer provided an economic update, stating:

  • Real GDP is forecast to have fallen sharply in the June quarter by 7 per cent;
  • After a fall of 3¾ per cent in 2020 real GDP is predicted to grow by 2½ per cent in 2021;
  • The cash balance is forecast to decrease from $85.8 billion deficit in 2018-19 to $184.5 billion deficit in 2020-21;
  • Net debt is expected to be $488.2 billion (24.6 per cent of GDP) at 30 June 2020, increasing to $677.1 billion (35.7 per cent of GDP) by 30 June 2021; and
  • The unemployment rate is forecast to peak at around 9¼ per cent in the December 2020 quarter.

The Treasurer outlined the Government’s estimated $289 billion or the equivalent of 14.6% of GDP in support for workers, households and businesses:

  • Economic support has increased real GDP by 3/4% in 2019-20 and 4.25% per cent in 2020-21;
  • $85.7 billion in Jobkeeper Payment;
  • $16 billion in payments through Boosting Cash Flow for Employers;
  • $1 billion through JobTrainer program; and
  • $2 billion through the National Bushfire Recovery Fund.

The Federal Government committed $9.4 billion to support the health response to the COVID-19 pandemic with:

  • $3.7 billion to build hospital systems capacity;
  • $619.1 million to support bulk billing;
  • $54.8 million for additional support for General Practitioners;
  • $122.1 million to support the mental health; and
  • $18.3 billion in new and existing funding over the next five years to the Seventh Community Pharmacy Agreement.

Regional Capitals Australia will continue to advocate for the consideration of our regions in the recovery process, to ensure that our communities are not left behind.