In its quarterly statement, the central bank highlighted a growing concern about high and rising unemployment in the face of fading government support.

“There is a risk that business insolvencies will rise by more than expected as government support programs are tapered, slowing the recovery in activity, reducing investment and placing upward pressure on the unemployment rate,” the RBA’s report stated. 

“By the same token, the unprecedented government interventions to support businesses and enable them to build cash buffers could cushion firms as support is unwound and provide the basis for a faster recovery than currently forecast.” 

The RBA’s comments follow the Treasury’s comments at the Australian Business Economist webinar on Thursday, 5 November, when Treasury secretary Steven Kennedy said the movement may have to launch another series of interventions in the economy to help with unemployment post-COVID.

“Given the lack of monetary support available, the states and territories can also play an important role in supporting the economic recovery, especially in the areas where they have primary responsibility and are better placed to design and implement policy, including social and other infrastructure,” Dr Kennedy said.

Shadow treasurer Jim Chalmers said the decisions to cut JobKeeper and exclude many Australians from the new hiring credit scheme will mean that the recession will be deeper than necessary and the unemployment queues longer than they need to be.

“Australians need and deserve a comprehensive economic plan for the recovery to prevent a trillion dollars of debt and higher unemployment for longer being the only lasting legacies of this recession,” Mr Chalmers said.

He pointed out that much of the heavy lifting is being left to the central bank.

“The RBA has been forced to enact extreme measures to support the economy because the Morrison government is failing to prevent the jobs crisis from getting worse.

“It makes no sense for Scott Morrison to be pulling support out of the economy when unemployment is expected to be too high for too long.”

Treasurer Josh Frydenberg used a doorstop interview in Melbourne to point out the jobs recovery despite the tapering of JobKeeper.

“We’ve also seen job ads up this month by more than 9 per cent, and we’ve also seen loan approvals up by 5.9 per cent with particularly strong numbers for new loan approvals for new home construction off the back of the HomeBuilder program and other government incentives,” Mr Frydenberg told the media.

He also noted that the RBA’s slashing of the official cash rate was in line with the government’s support of the Australian economy.

“The decision by the Reserve Bank of Australia today to cut the cash rate down to 10 basis points and to target the three-year bond yield at 10 basis points complements the economic support that the Morrison government has provided the Australian economy.”

“The Reserve Bank made it very clear in their statement today that their moves today complement what the Morrison government announced in this year’s budget, particularly supporting job creation and our economic recovery,” Mr Frydenberg concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

Economy

Financial pressures and the 'she'll be right' attitude delay Australian divorces

In a revealing study, the Real Cost of Separation Report 2026 by Real Insurance has uncovered a trend of 'quiet uncoupling' among Australians, with financial pressures and concerns for children ...Read more

Economy

Labour market resilience provides RBA room for manoeuvre, says State Street economist

In the wake of the latest Labour Force data release, State Street, a global leader in financial services with a staggering US$54.5 trillion in assets under custody and administration and US$5.5 ...Read more

Economy

Geopolitical tensions shape investor strategies in private markets

In the face of mounting geopolitical tensions, investors are honing their strategies in private markets, as revealed by the 44th edition of the Coller Capital Global Private Capital BarometerRead more

Economy

Ellerston sees investment shift as Middle East tensions ease and inflation persists

Amid signs of easing tensions in the Middle East with US-Iran peace negotiations progressing, albeit at a slower pace than desired by markets, investors are being advised to reevaluate their ...Read more

Economy

Global markets face stagflationary pressures amid rising inflation and diverging growth

In a recent macroeconomic report, the Franklin Templeton Fixed Income team has highlighted that global markets are increasingly encountering a stagflationary environment, characterised by intensifying ...Read more

Economy

Corporate capex provides solid footing for US equities, says ClearBridge

In a promising development for the US economy, corporate capital expenditures (capex) are playing a crucial role in supporting economic growth, according to Jeff Schulze, head of economic and market ...Read more

Economy

Brands turn to household care and laundry strategies to weather cost-of-living crisis

As the UK braces for a 13% hike in its energy price cap by July 2026 and US gas prices soar to a four-year high due to geopolitical tensions, the global spotlight is once again on the cost-of-living ...Read more

Economy

GDP data prompts State Street expert analysis on cash rate and trade surprises

In light of the latest GDP figures, State Street, a global leader in financial services with a staggering US$54.5 trillion in assets under custody and/or administration and US$5.5 trillion in assets ...Read more