Invest
How much will the COVID-19 recovery cost the national government?
The Australian government needs to spend up to $90 billion to get over half a million Australians back into work post-COVID-19, new research has found.
How much will the COVID-19 recovery cost the national government?
The Australian government needs to spend up to $90 billion to get over half a million Australians back into work post-COVID-19, new research has found.
According to The Grattan Institute, a fiscal response of between $70-90 billion will aid Australia in getting its unemployment rate towards the Reserve Bank of Australia’s targeted 5 per cent.
In order to do this, the think tank said the additional stimulus should be focused on social housing spending, shovel-ready maintenance and infrastructure projects, which would get thousands of thousands back into work by the middle of 2022.
“Based on current economic forecasts, returning the economy to full employment will require sizeable fiscal support: in the order of $70-$90 billion in additional stimulus over the next two years, equivalent to around 3 to 4 per cent of GDP,” chief executive John Daley noted.
“Such stimulus should be deployed with an aim to reduce the unemployment rate by about 1.5 percentage points below current forecasts by June 2022. This could mean between 430,000 and 510,000 extra Australians back in work by mid-2022.”
The Grattan Institute also urges the government to expand the JobKeeper payments to include university staff, casual workers and temporary migrants, and extended beyond September for businesses that are still in strife.
“In the short-term, there has been an initial burst of activity as restrictions ease, supported by extensive government payments. But an abrupt withdrawal of government support in a few months’ time would magnify the economic risks,” Mr Daley said.
“If all, or even most, government emergency supports are withdrawn simultaneously in October, it will leave a substantial hole in incomes for households and businesses, and threaten the economic recovery.”
Instead, The Grattan Institute said the government will need to phase out government assistance such as JobKeeper slowly, which will cost an additional $30 billion in 2020-21.
Not only should the government extend the JobKeeper stimulus, it should increase the rate for Australians who are permanently unemployed due to the COVID-19 pandemic.
The permanent rate of JobSeeker should be increased by at least $100 a week, and Commonwealth Rent Assistance should be increased by 40 per cent.
“Australia’s unemployment benefit was inadequate before the crisis; the crisis highlighted its inadequacy. As JobKeeper is phased down from December, the temporary coronavirus supplement paid to unemployed Australians should be extended into 2021,” Mr Daley said.
“After that, as it is phased down gradually, the permanent rate of the JobSeeker payment should rise. The new permanent rate of JobSeeker should also be benchmarked to growth in wages, rather than inflation, to ensure it keeps pace with community living standards.”
Finally, the think tank said Child Care Subsidy should be raised to 95 per cent of costs for low-income households, to cushion the shock to family budgets as parents start paying for childcare again, and to reduce financial barriers for parents taking on more paid work.
“Childcare is crucial to enabling many Australians, particularly women, to engage in paid work. As the free childcare arrangements put in place during the crisis are unwound, a higher Child Care Subsidy should be introduced with a simpler, flatter taper.”
“Under the previous system, childcare costs were still very high by international standards, discouraging secondary earners (usually women) from taking on more paid work,” Mr Daley concluded.
About the author
About the author
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Dissecting the budget and what it means for your equities, property and super
Listen now
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
