COVID-19 to hit Victorian GSP by 14 per cent in June quarter
15 May 2020, Written by David Simmons
According to Victorian Treasurer Tim Pallas the state was on track to record its sixth-straight budget surplus this financial year.
But the one-two punch of the bushfires followed by the COVID-19 economic crisis has left the State looking worse for wear.
Pallas says while the bushfires were devastating both economically and socially, the impact of COVID-19 costs is far worse than what the State spent on post-bushfire recovery.
The anticipated cost for the bushfires was expected to be 0.1 per cent of the State's annual Gross State Product (GSP), equating to around $500 million.
In comparison COVID-19 is anticipated to hit GSP for the June Quarter by 14 per cent, relative to previous forecasts.
"Let's be clear that we're operating with anything but normal circumstances," says Pallas.
"I want to be very clear that this is not the time for any government to be chasing surpluses. This is a time for governments to prioritise the welfare, the wellbeing of the community, the workforce and business. And that's exactly what we will be doing."
Today's economic update for the March quarter saw the Treasurer announce that Victoria was on track to recording a surplus of $618 million in FY20, but the unprecedented effect of both the bushfires and COVID-19 means the state's economic forecast now looks very different.
The March financial report shows a deficit for the year to March of $773 million, and that is before the full effects of the coronavirus really make a mark.
If not for these events Pallas says total expenditure for the financial year would have aligned with the Government's strategy of constrained expenditure growth, forecast at 3.1 per cent.
Yesterday's Australian Bureau of Statistics announcement regarding the national employment figures showed Victoria recorded 6 per cent unemployment in April, with 127,000 more Victorians out of work.
"But of course, hidden in that figure of 6 per cent is the fact that we're seeing worsening of participation in the labour market," says Pallas.
"So all of that means that there is not only a rise in unemployment but there is also a profound impact hidden within the community because people cannot get the hours and are giving up on looking for work in the labour market."
Since the COVID-19 pandemic started to hit Australia Victoria has invested more than $5 billion toward health services, students, businesses, tenants and landlords.
The Treasurer says more than 50,000 businesses and up to 1 million workers have benefitted from its support measures.
The State will also defer scheduled capital payments and dividends from the Transport Accident Commission, Worksafe, and the Victorian Managed Insurance Agency because of the uncertainty of the financial environment.
"Right now we're focussed on giving Victorian families, businesses and communities the support they need to get through to the other side of this crisis," says Pallas.
Updated at 10:33am AEST on 15 May 2020.
Author: David Simmons