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July 2020 Economic and Fiscal Outlook

The economic impact of the COVID-19 crisis

On 23 July 2020, the Treasurer released an update on Australia’s Economic and Fiscal Outlook. The update provided details of the impact of the COVID-19 pandemic on Australia’s economy and fiscal position, taking into account the stimulus measures introduced, including the JobKeeper program. This follows announcements on 21 July 2020 in respect of the outcomes of Treasury’s review of JobKeeper and the Coronavirus Supplement payment.

The key announcements are as follows:

  • The budget deficit stands at $85.8 billion for 2019-20. This will more than double for 2020-21 to $184.5 billion
  • The unemployment rate is expected to peak at around 9.25 per cent in the December 2020 quarter
  • The JobKeeper scheme will be extended to 28 March 2021, with employer eligibility tightened, payments tapered down over the period and different rates for employees based on hours worked in the test period
  • No further stimulus or tax measures were announced in the update. It is expected that the Government will make further announcements on stimulus or tax measures in the Budget on 6 October 2020.

The economic outlook

As expected, the deficit reflects the impact of the substantial stimulus packages announced in March and April, necessary to support an economy in crisis.

A review of JobKeeper

JobKeeper to be extended to March 2021, with a lower payment better targeted to those businesses and workers who need it most.

Support for business

Whilst the Government is continuing to announce further business support packages, no new stimulus measures were announced in the Economic and Fiscal Outlook.

Support for individuals

Recognising the ongoing weakness in the job market, the JobSeeker Coronavirus Supplement will be continued, albeit at a lower rate.

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