Spend up! Aussie’s $200 billion COVID stash to save economy

Aussies shut their wallets and saved up big during 2020. Now that pent up cash could be the key to saving the economy.

Aussies have amassed more than $200 billion more in savings since the start of the COVID-19 pandemic, which the Morrison Government is banking on seeing the economy through the upcoming March fiscal cliff.

The JobKeeper wage subsidy finishes at the end of March, which will mean businesses will have to survive without the unprecedented taxpayer-funded cash injection.

There were about 218,000 Queenslanders on JobKeeper as of November, who are receiving the $1000 a fortnight wage subsidy.

Treasurer Josh Frydenberg says the $200 billion in extra savings amassed could create jobs if it gets spent. Picture: NCA NewsWire/Gary Ramage

It is understand the government has a watching brief on whether any industry-specific assistance packages will be needed after this, such as the $128 million grant program for travel agents announced in December.

The APRA banking data shows that household savings deposits increased by almost $113 billion from January to November last year, up more than 11 per cent, while business deposits increased by $104 billion.

Treasurer Josh Frydenberg has seized on the new data, saying that the huge pool of unspent cash in the bank means the fiscal cliff can be avoided even after support tapers off.

“With an additional $200 billion sitting on household and business balance sheets compared to the start of last year there is a huge sum of money available to be spent across the economy helping to create jobs and maintain the momentum of our economic recovery,” he said.

There was a 6.5 per cent rise in retail sales in the September quarter following the lifting of the lockdown, Australian Bureau of Statistics data shows, the highest growth on record.

New treasury analysis projects economic activity will be five per cent higher this financial year and 4.5 per cent higher in 2021-22 than it would have been without supports like JobKeeper, fast tracked tacks cuts and other measures.

“With the JobMaker Hiring Credit, personal income tax cuts, investment incentives and a range of other measures our economic comeback will be continue,” Mr Frydenberg said.

Opposition treasury spokesman Jim Chalmers says the government is removing support from the economy too quickly. Picture: NCA NewsWire/Gary Ramage

Opposition treasury spokesman Jim Chalmers has argued that while some parts of the economy are recovering, others including tourism and hospitality, are still struggling.

“That means the government should be considering targeted support for those workers, small businesses, industries and areas of Australia who are doing it especially tough,” Mr Chalmers told Sky News.

“Don’t declare victory over the economic consequences of this virus too early because a lot of people are at risk of being left behind.”

Mr Frydenberg has said that JobKeeper was always intended to be a temporary program, having already been extended six-months beyond its original end date.