Coronavirus, bushfires and drought will hit NSW Budget hard
Coronavirus, bushfires and drought are set to hit the state’s bottom line, with NSW Treasurer Dominic Perrottet desperate to minimise the financial harm caused by the ‘highly unusual set of challenges’.
NSW
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NSW is staring down a looming budget bomb, with the state’s chief economist tasked with a string of urgent industry meetings in a bid to begin to quantify the financial hit of coronavirus on the state’s economy.
The triple threat of the virus, the bushfires and the drought is set to hit the state’s bottom line, although it is too soon to put a figure on the damage and the government believes a strong NSW economy has the resilience to combat the problem.
It comes as the federal government extended by a week the travel ban preventing Chinese visitors and students from entering Australia.
Prime Minister Scott Morrison yesterday said he was mindful of the “economic impacts” of the decision. “We did not take this decision lightly,” he said.
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Treasurer Dominic Perrottet told The Daily Telegraph: “We will always put people before numbers.”
Current NSW Treasury modelling estimates the combined impact of fires and coronavirus could detract between one- and two-thirds of a percentage point from 2019-20 gross state product (GSP) growth.
“We are facing a highly unusual set of challenges and we won’t sit by and watch things unfold,” Mr Perrottet said.
“It’s already hurting education, retail and tourism sectors, all very important to NSW and Australia, and we need to do everything we can to understand and limit harm.”
He said the state’s economy was “resilient and robust” and could “take the punches when they come”.
Mr Perrottet has ordered chief economist Stephen Walters to meet industry leaders in tourism, education, retail, hospitality and resources to gauge the scope of the financial hit to China, our second largest trading partner.
There is likely to be a short-term hit to the state budget, with the half-year review last year forecasting a revised surplus of $702 million.
Already, the bushfires alone will see a $1 billion hit to the budget outside the capital investment program.
But the financial impact of the coronavirus could be significant, taking into account a decline in Chinese demand for tourism and education exports, a reduction in household spending and confidence, and a declining demand for Australian commodities.
Chinese visitors spend $4 billion a year in NSW and 30 per cent of the state’s foreign students come from China.
All four NSW patients diagnosed with the potentially deadly coronavirus have now been discharged from hospital almost three weeks after the first case was confirmed.
