Finance Finance News Coronavirus-driven deficit blows out by $61 billion

Coronavirus-driven deficit blows out by $61 billion

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The coronavirus recession has driven the federal budget into a $61 billion deeper hole than anticipated.

Government expenses for May were almost double those for the same month last year as revenues fell and spending soared amid the pandemic, new Parliamentary Budget Office figures show.

The $79.5 billion in expenses was a significant jump from April, as JobKeeper wage subsidies and cash-flow boosts to small businesses were paid out.

Revenue dropped 18 per cent – or $9.7 billion – compared to May 2019, mainly due to lower company and income tax takes as business dropped off and people lost jobs.

A short-term doubling of unemployment allowances was announced in March to help people in financial distress amid the downturn.

The PBO says revenue is down $18.1 billion for the 2019/20 financial year compared to expectations outlined in December.

“To put this in perspective, this is roughly equivalent to the Commonwealth’s annual spending on family tax benefits or schools,” it said on Wednesday.

The deficit by the end of May had ballooned to $64.9 billion, compared to an expected $4 billion.

Commonwealth net debt grew to $464 billion.

-with AAP