What the Treasurer’s economic update means for you
On a day when finance boffins everywhere were supposed to be in Canberra to hear Josh Frydenberg spruik a Federal Budget surplus, the Treasurer unveiled a much sadder set of numbers.
His forecast of Australia's biggest-ever economic slump of 10 per cent to hit in the June quarter, and his warning that unemployment would spike to 10 per cent, show the impact of the coronavirus on the nation's finances.
But what does it mean for your personal finances?
The answer will depend largely on whether you still have a job, although Mr Frydenberg's update gives us a few pointers.
A RECESSION IS HERE
Those who say there is a "looming recession" are wrong. We're in one now, as our economy was already weak at the start of the year because of the bushfires and a struggling China.
A perverse fact about recessions is that they can be helpful for people who are lucky enough to hold onto their jobs. That's because interest rates will be low and there will be extra incentives to encourage people to spend.
NO TAX HIKES
Australia will have a huge debt to pay back - Deloitte Access Economics estimates the government will spend $143 billion more than it receives this year, and then another $132 billion more next year.
However, the Treasurer said higher taxes were not the path to paying back the massive pile of debt because tax hikes hurt "aspiration and investment". Growing the economy was the solution, he said, and that means that people's fears of higher taxes appear unfounded.
INCENTIVES FOR BUSINESSES
Mr Frydenberg said businesses would drive the national jobs rebound, not governments.
That should mean a bigger push to help business owners through tax incentives and other benefits - including for small businesses and sole traders, the backbone of our economy.
EXPECT JOBKEEPER CHANGES
The government has committed to reviewing its $130 billion JobKeeper subsidy scheme next month, and there have been conflicting calls for it to be tweaked, cut back or extended.
Mr Frydenberg's comments that "Australians know there is no money tree" suggests the government won't throw cash at JobKeeper if it's not needed in the coming months.
If you're among the five million workers receiving the subsidy, don't bank on it continuing in its current form until October.
We shouldn't enjoy our new-found freedoms too much and ignore the strict social distancing rules already in place.
The Treasurer warned that having to reimpose restrictions because of a fresh coronavirus surge would cost the country $4 billion a week. That would mean more job losses, more business collapses and more household financial turmoil.
Originally published as What the Treasurer's economic update means for you