It could be at least a month before federal Parliament can formally debate Treasurer Josh Frydenberg’s much anticipated economic and fiscal update, with the Prime Minister seeking to cancel the planned sitting in early August.
Mr Frydenberg will hand down his update on Thursday, which will contain the government’s response to a Treasury review of the JobKeeper wage subsidy and the enhanced JobSeeker dole payment, which are due to end in September.
Mr Frydenberg insists some form of income support will continue when JobKeeper ends at the end of September.
“There will be another phase of income support,” Mr Frydenberg told Nine newspapers, adding that “maintaining business and household confidence is going to be critical”.
He said tourism, arts and recreation, hospitality and aviation were key industries that needed support.
Prime Minister Scott Morrison has requested the scheduled August 4 to 13 parliamentary sitting be cancelled over the growing spread of the coronavirus in Victoria and the trends in NSW.
The Prime Minister received advice from acting Chief Medical Officer Paul Kelly that going ahead with it would pose a significant risk to MPs, senators, staff and the broader ACT community.
The next sitting would commence on August 24.
Opposition Leader Anthony Albanese accepted Mr Morrison’s request because it was based on medical advice but he was far from happy that the government would avoid scrutiny of its handling of the coronavirus and its economic supports.
He said three million Australians were living with the uncertainty of whether the JobKeeper support would be given past September.
“There are small businesses who remain in uncertain territory, unsure of whether they will continue to have support,” he said in Sydney on Saturday.
“And JobSeeker, under the current legislation, runs out and reverts to the old $40 a day level come September unless legislation is changed.”
He will be asking for additional Senate Estimates hearings and more meetings of the COVID-19 committee chaired by Labor senator Katy Gallagher to hold the government to account.
The update will also provide the first set of economic forecasts since the mid-year budget review last December after the traditional handing down of the May budget was postponed until October because of the pandemic.
AMP Capital chief economist Shane Oliver expects the government will forecast an economic contraction of 0.5 per cent for 2019/20 and a further negative result of minus two per cent for 2020/21 as the country suffers its first recession in nearly three decades.
After the balanced budget in 2018/19, Dr Oliver predicts the budget to be in a deficit of $95 billion for 2019/20, growing to $223 billion in 2020/21. Last December, the government had forecast surpluses in both these financial years.
Dr Oliver expects Mr Frydenberg to extend and revamp JobKeeper, as well as some paring back of JobSeeker, but to a level above the $40 a day that was in place before the crisis struck.
He also thinks it’s likely income tax cuts legislated for 2022 will be brought forward (at a cost of around $15 billion a year), and there will be more investment incentives and additional industry support measures.