{"id":859,"date":"2020-07-23T03:42:36","date_gmt":"2020-07-23T03:42:36","guid":{"rendered":"https:\/\/insight.thomsonreuters.com.au\/business\/posts\/treasurer-flags-record-184-5bn-budget-deficit"},"modified":"2023-05-15T14:20:45","modified_gmt":"2023-05-15T04:20:45","slug":"treasurer-flags-record-184-5bn-budget-deficit","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.com.au\/business\/posts\/treasurer-flags-record-184-5bn-budget-deficit","title":{"rendered":"Treasurer flags record $184.5bn Budget deficit"},"content":{"rendered":"\n

The Treasurer, Josh Frydenberg has released an Economic and Fiscal Update July 2020<\/a>, forecasting an underlying cash Budget deficit of $85.8bn for 2019-20, rising to $184.5bn for 2020-21 (or 9.7% of GDP).<\/h4>\n\n\n\n

Gross debt is expected to increase to $851.9bn (45% of GDP) at 30 June 2021, while net debt will be $677.1bn (35.7% of GDP). Once the economic recovery is established, the Treasurer expects stronger growth and an improvement in the fiscal position to help stabilise government debt as a share of GDP.<\/p>\n\n\n\n

Tax receipts have been revised down by $95.6bn, being $31.7bn in 2019-20 and $63.9bn in 2020-21 due to the severe contraction in economic activity from the COVID-19 pandemic. <\/p>\n\n\n\n

The Treasurer said the outlook for tax receipts remains uncertain reflecting uncertainty around the economic outlook and how it interacts with structural and administrative features of the tax system, such as the ability of taxpayers to carry forward losses to offset future income. <\/em><\/p><\/blockquote>\n\n\n\n

Total tax receipts, including GST and indirect taxes, are estimated to fall from $432bn in 2019-20 to $416bn for 2020-21.<\/p>\n\n\n\n

The Economic and Fiscal Update, released on 23 July, outlines the key COVID-19 policy response measures announced by the Government since March 2020. The Treasurer said the Government has provided economic support for workers, households and businesses of around $289bn (14.6% of GDP) in response to COVID-19. The unemployment rate is forecast to hit 8.75% in 2020-21.<\/p>\n\n\n\n

JobKeeper extension<\/strong><\/p>\n\n\n\n

The economic update incorporates the extension of JobKeeper payments for 6 months beyond its legislated finish date of 27 September 2020, as announced by the Government on 21 July 2020. The total cost of the JobKeeper regime, as extended, is now estimated to be $85.7bn over 2019-20 and 2020-21.<\/p>\n\n\n\n

As announced on 21 July<\/a>, the current JobKeeper payment of $1,500 per fortnight will be reduced to $1,200 per fortnight from 28 September (or $750 for employees working less than 20 hours per fortnight). From 4 January to 28 March 2021, the rate is $1,000 (or $650 for less than 20 hours per fortnight). Businesses will also be required to demonstrate an actual decline in turnover from 28 September under the existing turnover test for each of the 2 periods of extension.<\/p>\n\n\n\n

New measures announced<\/strong><\/p>\n\n\n\n

While the Economic and Fiscal Update did not announce any major new financial support measures, it has announced the following changes that do not appear to have been previously announced:<\/p>\n\n\n\n