Another $180bn cash injection in the works, ANZ says

Federal and state governments will commit to an additional $180bn in stimulus spending, ANZ predicts.

Finance Minister Mathias Cormann and Treasurer Josh Frydenberg on October 6 will present the most consequential budget in living memory. Picture: Gary Ramage

Federal and state governments will commit to an additional $180bn in stimulus spending in their upcoming budgets, as treasurers transition from nursing households and businesses through the COVID-19 crisis to powering a jobs-led recovery.

New estimates from ANZ point to an additional $140bn in commonwealth spending, complemented by a further $40bn in state and territory commitments over the four-year budget horizons. At the federal level, $80bn will be in recurrent spending, or revenue forgiveness measures. The remaining $60bn will be capital spending, such as infrastructure stimulus. All levels of government have already committed about $215bn in stimulus in this and the last ­financial years.

“The key focus will be jobs growth, with governments willing to spend until they are confident of reaching their jobs recovery targets,” ANZ senior economist Cherelle Murphy said.

“Some ‘bridge building’ funding to low- and middle-income earners in the short term, ­designed to soften the impact of Victoria’s shutdowns and the fiscal cliff, seems likely in the ­December and possibly March quarters.”

Josh Frydenberg and Finance Minister Mathias Cormann on October 6 will present the most consequential budget in generations. The Treasurer this week again signalled he is fast-tracking already legislated income tax cuts, and said the focus would be on deregulation and cutting red tape to smooth the way for businesses to grow and hire again in the wake of the worst quarterly economic performance in 75 years.

Ms Murphy said the federal budget would include an extension of the JobSeeker supplement beyond the December cut-off date — an idea Scott Morrison has said he is “leaning heavily” ­towards. She also said the government would spend $5bn-$10bn on direct cash stimulus to a range of households to limit the risk of the economy going backwards in the December quarter.