Budget deficit blows out to $40bn through coronavirus crisis

Latest figures reveal the additional cost of programs such as the $750 one-off welfare payment to households.

The Morrison government ploughed an extra $12bn into the economy to help keep households and businesses afloat through the COVID-19 crisis.

The federal budget deficit has blown out to $40bn over the financial year to April, as the Morrison government ploughed an extra $12bn into the economy to help keep households and businesses afloat through the COVID-19 crisis.

The latest figures from the Department of Finance reveal the additional cost of programs such as the $750 one-off welfare payment to households, as well as the boost to business cash flow program.

Evidence of the rapidly deteriorating budget deficit – which experts believe will push well above $100bn in this and the next financial years – came as Scott Morrison on Friday said he “anticipated” that the government stimulus will continue for “quite some time”.

The surge in spending was accompanied by a $20bn collapse in tax receipts for the financial year to date versus what had been expected in the government’s mid-year budget update in late 2019.

Finance Minister Mathias Cormann said “the fiscal impact of our historically significant support measures is also temporary, limited to the 2019-20 and 2020-21 financial years and is not baking material structural burdens into the budget bottom line beyond that period”.

The escalating cost of the emergency fiscal support measures, now expected to come in at $150bn spread across this financial year and the next, comes amid a heated debate around the need for fiscal stimulus beyond the specified September 30 expiry date for large measures such as the $70bn JobKeeper program and the expanded JobSeeker payments.

The Prime Minister denied there was a split between his government and Reserve Bank governor Philip Lowe, who a day before warned that prematurely withdrawing stimulus could “damage” the economy, saying the two were on the same page when it came to supporting the recovery.

With Dr Lowe admitting the central bank has effectively run out of ammunition, having pushed the official cash rate to 0.25 per cent and implemented a bond-buying program, Mr Morrison said that the “Commonwealth government, in particular, has certainly stepped into the breach”.

“And we've done so significantly. And we anticipate that we'll need to do that for some time. But that doesn't mean that requires you to do it in every single measure that we currently have out there. We've got a lot of flexibility.”