Josh Frydenberg casually reveals eye watering $83 billion deficit

Treasurer Josh Frydenberg has casually revealed the biggest deficit in Australian history, showing the true cost of the pandemic.

There’s taking out the trash and then there’s taking out the trash when it comes to bad news.

But how do you shove an $85 billion deficit in the budget wheelie bin and just casually moonwalk out of there?

It’s a big number. Hard to miss. But today, the Treasurer Josh Frydenberg set a new Olympic standard for just slipping in some big news in a press conference ostensibly about credit reform.

He just casually dropped in the final budget outcome for 2019-20.

The budget deficit is an eye watering $85.3 billion in 2019-20 or 4.3 per cent of GDP.

“This is a half a billion improvement from what was estimated in terms of the deficit, but a $93 billion deterioration forecast the end of the last year,’’ Mr Frydenberg said.

It’s the biggest budget deficit in Australian history eclipsing Kevin Rudd’s $54.5 billion budget deficit during the global financial crisis.

Welfare payments soared by $57.7 billion higher than the 2019-20 MYEFO estimate as a result of measures like JobKeeper, the Coronavirus Supplement, the CashFlow boost and other economic support payments.

Tax receipts tumbled by $33.1 billion as the economy was shutdown to stop the spread of the COVID-19 virus.

Treasurer Josh Frydenberg revealed the huge deficit on Friday.

Remember that one took 10 years to pay down, until the budget was “in balance”, or political mumbo jumbo for ‘close to a surplus but not quite there yet’.

Traditionally, the budget deficit is closely guarded until budget night with journalists forced to sign non-disclosure clauses before entering a six-hour lock up on the grounds the information is market sensitive.

Faced with confirming the biggest budget deficit in Australian history, Mr Frydenberg clearly decided a different approach was required.

Consider for a moment that just last year, the Treasurer had forecast a budget surplus in 2019-20 of $4.1 billion. So that’s a $90 billion reversal into the red as a result of COVID-19.

Deloitte Access Economics’ Chris Richardson, who has made a living out of predicting budget surpluses for decades told news.com.au that it’s all about managing expectations.

“There are a few things the government knows that everyone else doesn’t know so governments love to control the news,’’ Mr Richardson said.

The final budget outcome for the year is usually announced around this time of year, it’s just that the federal budget doesn’t generally follow 11 days later.

“So, they are telling us at the same time that we would usually be told, but not in the same way,’’ he said.

Yesterday, the Treasurer also announced a big change to the government’s fiscal strategy.

The government isn’t even going to say when the budget will be back in black, that’s how big the deficit is.

But the government also stressed that it was the right economic decision to support the economy and there’s also never been a better time to borrow money because interest rates are so low.

“It does reflect the economic circumstances we’re in, the budget in less than two weeks’ time will be the next stage of our JobMaker plan and by growing the economy, by getting more people into jobs, we’ll be able to repair the budget,’’ Mr Frydenberg said.

Finance Minister Mathias Cormann conceded today the $85.3 billion deficit was “a challenging set of numbers”.

“Despite all of the challenges, that we’re facing as a nation, and despite the challenging set of numbers we’re formally reporting today in this final budget outcome, Australia remains in a better, stronger more resilient position than just about any other country in the world,’’ Senator Cormann said.

Lucky for him he won’t be around to for the repair job, he’s retiring from politics after the budget is handed down.