Treasurer: Private sector to drive economic rebound, not government

Treasurer: Private sector to drive economic rebound, not government

Speaking in Parliament today for the first time since 8 April, Federal Treasurer Josh Frydenberg (pictured) made his intentions clear for Australia's economic future.

At the centre of his plan are free market economic principles, small government and temporary assistance for those who are struggling.

The Government's ultimate aim is to reopen Australia to the point that businesses can recommence in a COVIDSafe economy, delivering billions to the national GDP.

"While there'll be a significant increase in government debt, which will take many years to repay, our measures have been designed in a way that protects the structural integrity of the budget," Frydenberg said.

"The proven path for paying back debt is not through higher taxes, which curtails aspiration and investment, but by growing the economy through productivity enhancing reforms.

"The values and the principals that have guided coalition reforms in the past must guide us again in the future... Unleashing the power of dynamic, innovative and open markets must be central to the recovery with the private sector leading job creation; not government."

According to Frydenberg, the national GDP is about to witness the results of a reopened Australia.

Once all restrictions are lifted the Treasury expects to see $9.4 billion returning to the economy.

But Frydenberg has warned that if restrictions need to be reimposed the GDP would be hit by more than $4 billion per week.

Under the three separate stages of the Federal Government's roadmap to recovery more than 850,000 people will be able to return to work.

More than half of these workers will come from three industries: the arts and recreation sector, the transport sector and the construction sector.

"Treasury estimates that as a result of easing the restrictions in line with stages One, Two, and Three, the GDP will increase by $9.4 billion each month," Frydenberg said.

This $9.4 billion will come directly from the reanimation of the retail sector, the opening of hospitality venues, and the opening of schools and local government buildings.

The relaxation of travel restrictions is also expected to contribute around $700 million.

Just lifting restrictions at Stage One will result in more than 250,000 people going back to work, and more than $3 billion additional GDP.

State by state, the Treasury estimates lifting Stage One restrictions will lead to:

  • 83,000 jobs and $1 billion in NSW;
  • 64,000 jobs and more than $715 million in VIC;
  • 51,000 jobs and $610 million in QLD;
  • 25,000 jobs and $435 million in WA;
  • 17,000 jobs and $178 million in SA;
  • 5,000 jobs and $50 million in TAS;
  • 4,000 jobs and $60 million in the ACT;
  • And 3,000 jobs and $40 million in the NT.

"These improvements in the economy depend on us continuing to follow their health advice," says Frydenberg.

"Failing to do so could see restrictions imposed at a loss of more than $4 billion a week to the economy."

His Statement to Parliament today was replete with some sobering figures about the current state of Australia's economy.

Unemployment is set to hit 10 per cent in the June quarter, household consumption is expected to be around 16 per cent lower, and business investment will be down 18 per cent.

The Treasurer will provide another update on Australia's economic situation in June and will detail the Federal Budget in October this year.

Updated at 1:36PM AEST on 12 May 2020.

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