“That’s a reflection of the queues we have seen outside Centrelink and that is the reflection of the health restrictions that have had a severe economic impact,” he told the ABC’s Insiders television program on Sunday.
“There is going to be a big hole in the global economy, there’s no doubt about that.”
The treasurer will be talking to his G20 counterparts this week by phone to gauge the impact of COVID-19 on other countries.
However, Frydenberg said he had “no hard and fast numbers as yet” to reflect the actual size of the virus impact in Australia.
That hasn’t stopped financial market economists making their own predictions on what the outlook might look like, which is likely to be a deep recession and the first in nearly 30 years.
For example, Westpac economists are predicting three consecutive negative quarters of economic activity – 0.7 per cent in the March quarter, a massive 8.5 per cent in the June quarter and 0.6 per cent in the September quarter.
Even though they expect the December quarter will show a huge 5.2 per cent rebound as restrictions are eased and businesses reopen, it would still leave growth five per cent lower over the year.
Australians will get the first taste of what the pandemic has meant for unemployment when March labour force figures are released on Thursday.
Economists’ forecasts centre on an unemployment rate of 5.4 per cent for March, compared with 5.1 per cent in February.
Predictions range as high as 5.9 per cent, a level not seen since early 2016.
However, they expect the rate could almost double towards 10 per cent by the middle of year as the economy sinks into recession.
This peak is well below a level economists were talking about just a few weeks ago, prior to the government announcing its $130 billion JobKeeper package, which Mr Frydenberg successfully steered through a special parliamentary sitting last week.
The treasurer said he no plans to change the rules of the scheme to include skilled foreign workers or change the definition to include more casual workers.
He said that would add another million people to the scheme at cost of $18 million.
Shadow treasurer Jim Chalmers said Frydenberg could avoid adding to a growing unemployment queue.
“When we see a spike in unemployment in the next couple of months, remember that Josh Frydenberg had the opportunity to prevent some of those job losses by exercising his powers on behalf of casual and temporary workers,” Chalmers told reporters in Brisbane.
“It’s not too late for him to change his mind and for the government to change course.
The government has racked up over $320 billion in spending in a matter of weeks to try and shield the economy from the worst of COVID-19.
Frydenberg said this will be paid back in the year’s ahead, but noted that before the crisis, government debt was a quarter of that in the US and UK as a proportion of the economy and a seventh of that in Japan.
“The way to meet that growing debt burden is to grow the economy,” the treasurer said when asked how the debt will be paid.
But he reiterated he had “no plans” to raise the rate of GST.
Local News Matters
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