Labor has slammed the government for sticking to its plan to cut the JobSeeker and JobKeeper payments as the nation’s worst ever economic result and GDP cratering is revealed.

Australia’s national accounts data, released on Wednesday, confirm the coronavirus crisis has punched an unprecedented hole in the economy.

Gross domestic product (GDP) plummeted a whopping seven per cent in the June quarter – “the largest quarterly fall on record,” according to the Bureau of Statistics.

Prime Minister Scott Morrison called it “a devastating day for Australia.”

Economic activity fell 7.0% in June quarterhttps://t.co/Zrm0DA9V9f

— Australian Bureau of Statistics (@ABSStats) September 2, 2020

The result, worse than market expectations of a six per cent fall, follows a 0.3 per cent decline in the March quarter and confirms the country has suffered its first technical recession since 1991. The ABS said the data had cut short “Australia’s longest streak of continuous growth, 28 years.”

The federal government had in recent days been laying the groundwork and softening expectations for a bruising set of numbers. Treasurer Josh Frydenberg said on Wednesday, shortly after the GDP data release, it was a “sobering” result.

Josh Frydenberg, Photo: AAP

“Behind these stories and these numbers are heartbreaking stories of hardship being felt by everyday Australians,” Mr Frydenberg said at a Parliament House press conference.

“We are reporting these devastating numbers but today, Australians are living them. We have done everything possible to cushion the blow for the Australian community from COVID-19. Our priority has and will continue to be saving lives.”

Despite the dizzying data, Mr Frydenberg was trying to be cautiously optimistic. He said previous Treasury projections had estimated GDP could have dropped up to 20 per cent, and also pointed out that Australia had fared better than the United Kingdom, United States, Japan, the G7 grouping and the OECD average.

The Treasurer claimed 700,000 more jobs would have been lost, representing an extra five per cent of unemployment, without the government’s intervention. He said the government had committed more than $300 billion to COVID response measures – but when pressed on this figure in Question Time on Tuesday, Mr Frydenberg said around $85 billion had actually been spent so far.

GDP plummeted 7 percent. Photo: ABS

He said much of this figure, including an actual increase in household income, was “driven by the largest increase in social assistance payments in Australia’s history” including boosts to JobSeeker welfare.

“Social assistance benefits rose by 42 per cent in the quarter,  contributing 4.4 percentage points to growth in household disposable income,” Mr Frydenberg said.

Despite the release of an Australian Council of Social Services (ACOSS) report on Wednesday estimating poverty in Australia would increase by one-third, to nearly 3.5 million people, following cuts to JobSeeker and JobKeeper, Mr Frydenberg said the government still maintained they were “temporary” measures.

Today Australia officially went into recession for the first time in 30 years.

One million people don't have a job. 400,000 more will join them by Christmas.

But when Australians need support, this Government is cutting back JobKeeper and cutting back JobSeeker.

— Anthony Albanese (@AlboMP) September 2, 2020

Labor has been belting the Coalition government in recent weeks over plans to scale back the JobKeeper wage subsidy and JobSeeker welfare payments. The JobKeeper program was on Tuesday officially extended past its original end date, but the passage of the legislation came with cuts to the level of payments, from $1500 a fortnight to $1200 then $1000 over coming months.

JobSeeker’s coronavirus supplement will be soon slashed from $550 a fortnight to $250.

Scott Morrison and Josh Frydenberg in Question Time on Wednesday. Photo: AAP

However, Mr Frydenberg said the plan to taper payments down was “the way forward for the Australian economy.”

When asked about the government’s recovery plan, he pointed to the JobMaker program to boost employment and retrain the unemployed.

Labor leader Anthony Albanese was quick on his feet after the ABS dropped the figures, heading into the House of Representatives to quickly condemn the government’s economic management.

“Today’s national accounts confirm Australia is in recession for the first time in three decades,” Mr Albanese said.

“Australia has plunged into the worst recession in almost a century… and the Prime Minister is withdrawing support for Australians and the economy.”

Greens leader Adam Bandt called on the government to maintain the welfare payment at its current level.

“Now is not the time to cut JobSeeker and support for workers, yet that is exactly what Scott Morrison is doing,” Mr Bandt said.

Josh Frydenberg shows a chart with international comparisons. Photo: AAP

“Inequality has been growing for a long time in Australia, but it appears that COVID-19 has accelerated this problem, leaving millions in economic stress while a small number of big shareholders and businesses are going gangbusters.”

The Australian Council of Trade Unions (ACTU) said it feared “millions” of people would fall out of work when JobKeeper payments are scaled back.

Its president, Michele O’Neil, claimed the government had “no plan for a way out”, calling for a “comprehensive national economic reconstruction plan to create jobs”.

“Instead of investment, what we are seeing from the Morrison government is the cutting back of essential supports like JobKeeper and JobSeeker,” she said.