The Final Budget Outcome report, released on Friday, revised the deficit figure from July’s budget update forecast of $85.8 billion.
The mid-year review released in December 2019, before the global pandemic hit, forecast a $5 billion surplus for 2019/20 with surpluses continuing well into the future.
Treasurer Josh Frydenberg said Australia had approached the global pandemic from a position of economic strength.
“Yes, the hole in the Australian economy is significant. Yes, the road back will be long, bumpy, and hard,” he told reporters in Canberra on Friday.
“But we have performed so much better than nearly every other nation in the world.”
The final budget outcome sets the base for the 2020/21 budget to be delivered on October 6.
Frydenberg said the new budget would focus on measures to boost aggregate demand and business investment.
The government will not pursue budget repair until the unemployment rate falls below six per cent.
“It is a significant change to our fiscal strategy, it does reflect the economic circumstances we’re in,” he said.
The coalition has also ditched its commitment to any surpluses over the next four years, which it says would risk undermining the economic recovery.
Finance Minister Mathias Cormann is adamant the government will not pursue tax increases or harsh austerity policies in response to the crisis.
“We’ll repair the budget by a focus and a priority on the economic and jobs recovery, and then of course beyond that, controlling expenditure growth moving forward,” he said.
Labor will be scouring the figures for evidence of how much money actually flowed to struggling businesses and households when support measures were announced in the first half of the financial year.
Shadow treasurer Jim Chalmers said the coalition government had promised a surplus in its first year and every year, and delivered six deficits before the pandemic.
He noted government debt was already at a record high before the pandemic.
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