Treasurer Josh Frydenberg has revealed the budget will be in the red by $85.8 billion in 2019-20 and $184.5 billion in 2020-21, marking the biggest deficit since World War II due to drastic spending to mitigate the damage from the coronavirus pandemic.
At a special budget update on Thursday, the first since December, Mr Frydenberg said the unemployment rate was expected to reach 9.25 percent in the December quarter, while GDP would contract by 0.25 percent in 2019-20 and shrink 2.5 percent in 2020-21.
The economic downturn has cost the budget $32.4 billion in 2019-20 and $72.2 billion in 2020-21. Tax receipts are down $31.7 billion in 2019-20 and $63.9 billion in 2020-21.
The coronavirus pandemic has dashed the Morrison government’s plans to be “back in the black” and produce the first surplus since 2007-08.
The 2020-21 deficit is about four times the last record, which was $54.5 billion when the Rudd government tackled the global financial crisis.
More to come.