Scott Morrison has warned the government can’t “save” every job and will need to be “extremely cautious about expenditure” in signs it is preparing to withdraw economic supports to help shrink anticipated record deficits.
On Monday, Morrison outlined the government’s approach to the budget as the economy reopens and Covid-19 restrictions lift, suggesting it will not pursue “excessive austerity” but warning it is neither “wise nor responsible” to continue stimulus spending.
The prime minister told the Committee for the Economic Development of Australia (Ceda) that $100bn of economic activity has been wiped out in 2020, which will take “an estimated two years, at least” just to recover to pre-Covid levels.
“We need to lift our economic growth rate by more than one percentage point above trend, to beat the expected pre-Covid 19 GDP position by 2025.”
Morrison said in April “30 months of average jobs growth” was lost – with “still worse news ahead” in May jobs figures, to be released on Thursday.
In question time, Labor targeted the government over the fact a record 1.6 million Australians are on jobseeker unemployment benefits, while the jobkeeper wage subsidy program was undersubscribed, with 3 million fewer recipients than expected.
Morrison replied that “we cannot say to Australians that government or anyone else, ultimately, will be in a position to ensure that every job can be saved, and every business can be saved. That is unrealistic.”
Morrison said he would not “make false promises to the Australian people” and the government has “cushioned the blow” but cannot prevent it, in reference to unemployment, expected to reach 8% in the September quarter.
Earlier, Morrison told Ceda the Coalition will need to “recalibrate our fiscal strategy” after returning the budget to balance in 2019 and predicting a surplus for 2020, which did not eventuate.
“We are looking at a record deficit this year and next, and not just because of record Covid-19 expenditures,” he said, meaning deficits will exceed the $54.5bn record set after the Global Financial Crisis in 2009-10.
“Revenues have taken an equally large hit and while lower expenditure measures have been designed to be targeted and time-limited in accordance with the principles we set out, the impact on revenue will be longer lived as the economy makes its way back.”
Morrison said the government will aim to balance the budget by “keeping expenditures under control while boosting revenues through pro-growth policies that lift investment and get Australians back into jobs”.
“Neither excessive austerity nor higher taxes are the path that our government will pursue.”
Morrison rejected calls for more stimulus, such as Labor’s call to expand the $70bn jobkeeper program and the Greens’ call for more debt to fund the recovery.
“There will always be a case made for spending more and spending for longer and there are plenty of people who are happy to make that case,” he said.
Morrison argued debt was “not a wise nor responsible course” because it would compromise service provision in future and “dull the dynamism of the economy”.
With the bulk of the government’s $134bn of economic supports set to expire in September, Morrison is under pressure to explain what industry assistance will be provided if jobkeeper is withdrawn and to create jobs for those on the jobseeker unemployment benefit.
Morrison said the government will be “extremely cautious about expenditure” but that it would not step back from essential service provision.
He acknowledged the Covid-19 contraction had a “disproportionate impact on women and younger Australians and those with lower skills attainment”.
Morrison said that reopening the economy was likely to help those groups and promised to “maintain a key focus on our women’s economic security plan” – but mostly pointed to existing programs to help young people, such as apprenticeship subsidies, which have been criticised by the Productivity Commission.
Morrison announced the government’s deregulation taskforce will be moved into the department of prime minister and cabinet, and identified “modernising business communications” and improving occupational mobility as the first two moves to cut red tape.
Ben Morton, the assistant minister to the prime minister, said in a statement the taskforce will seek to cut business compliance costs by removing laws that mandate they use “certain methods of communicating or storing information – preventing them from using electronic delivery or adopting new technologies such as blockchain applications”.
The taskforce will also cut red tape by “exploring greater mutual recognition of qualifications” to “let business access skilled workers more quickly and provide more opportunities for people such as builders, trades workers, and architects and engineers”, he said.
In the question and answer session after Morrison’s speech – but without giving his own speech as scheduled – Labor leader Anthony Albanese argued the Coalition had been in power for seven years but “talk as if they had just been elected”. He accused Morrison of lacking a reform agenda.
He noted short-term casuals were excluded from the jobkeeper wage subsidy and the predominantly female industry of childcare was first to be removed from the $1,500 fortnightly payment.
“So it’s a reverse Titanic – it’s women and children off jobkeeper first.”
Albanese argued the crisis was an opportunity to “reset” the economy and help essential workers who “kept the economy going”.
Earlier, Morrison announced the government will bring forward a further $1.5bn in infrastructure spending and fast track 15 priority projects.
Morrison said he wanted the average of 40 days for federal environmental approvals to be slashed to 30 days, claiming delays cost business $300m in 2019.
Labor’s infrastructure spokeswoman, Catherine King, said that “much of today’s announcement is based on busting red tape on already funded projects like inland rail, when in reality spending on new or accelerated projects will be far more modest”.