Coronavirus: Rescue package puts deficit at $40bn

The federal budget deficit has blown out to $40bn, as the Morrison government ploughed an extra $12bn into the economy.

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 would 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.

The escalating cost of the emergency fiscal support measures, which are 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.