Scott Morrison is confident the momentum of Australia’s economic recovery from recession that started last year will continue over the course of 2021.
He said the government’s support measures – like JobKeeper, the JobSeeker supplement and HomeBuilder grants – have helped to take the country out of the crisis.
However, the support will end in March as planned.
“Our plan is for the Australian economy to stand on its feet,” the Prime Minister told reporters in Melbourne on Thursday.
“You don’t run an Australian economy on crisis settings when you have got through the crisis.”
Treasury boss Steven Kennedy said the economic recovery has been faster than anticipated just a few months ago, with support measures being more effective than expected and health outcomes relatively good.
In particular, Dr Kennedy told senators the labour market is recovering “surprisingly well” and he was pleased see participation in the workforce back at record levels that were seen before the COVID-19 pandemic.
He said unemployment has fallen faster than expected with the rate now at 6.6 per cent.
In the mid-year budget review released in December, Treasury had expected the jobless rate to peak at 7.5 per cent in March.
“That looks unlikely to me now,” Dr Kennedy told the Senate inquiry into the response to the pandemic.
“The RBA outlined their forecasts last week, which saw the unemployment rate falling from here. That does seem more likely to me.”
The government forecasts will be updated in the May budget.
“People have gone back to jobs and those jobs that are being generated again are going to more experienced people,” Dr Kennedy noted.
He said always coming out of any downturn the young, who won’t be competing for jobs with experience in a softer labour market, will need some support, he said.
As such, government measures like JobTrainer will be important.
The boss of the nation’s biggest bank is also optimistic about the economic outlook, but anticipates some of its customers will still require assistance during the course of this year.
Commonwealth Bank chief Matt Comyn said there has been a strong and marked improvement in a number of economic indicators – from consumer confidence to unemployment.
“That I think gives real cause for optimism at this point in time,” he told ABC radio the day after his bank reported a cash profit of $3.8 billion for the first six months of the 2020/21 financial year.
He said a large number of his bank’s customers have started repaying their loans and mortgages, having been deferred during last year’s economic downturn as a result of the pandemic.
“We do anticipate some customers are going to require assistance during the course of the year,” he said.
At the peak of the pandemic, Australian banks deferred almost one million mortgages and business loans to assist the economy during the downturn.
Australian Banking Association figures show across the nation’s seven largest banks there are now only 118,000 or 15 per cent of the loans remaining that were deferred at the peak in late June 2020.
“These are encouraging signs for the nation’s recovery,” ABA CEO Anna Bligh said.
Separately, a survey of more than 400 small- and medium-sized enterprises by Mastercard found over half are optimistic about the next 12 months, while seven-in-10 believe they will come back stronger.
More than half are forecasting revenue growth of at least 10 per cent during the next 12 months, with a slightly larger number expecting an increase in online sales.