Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Economists have warned the Australian economy could hit a pothole if there is no continuing federal government support when stimulus measures come to an end in March.
The government is adamant that both the JobKeeper wage subsidy and the JobSeeker coronavirus supplement will finish as planned, but is yet to confirm what, if anything, will replace them.
Prime Minister Scott Morrison has said crisis settings are only relevant to an economy in crisis.
But independent economist Nicki Hutley says while Australia might have got through the worst economic impacts of the pandemic, there are lingering issues to come.
“We are possibly focusing a little too much on the silver lining and perhaps ignoring the still large cloud that hangs over the economy,” she told the Committee for Economic Development of Australia.
“The idea that we can sail through the end of JobKeeper and the JobSeeker supplement without any impact on the economy is very naive.”
CEDA chief executive Melinda Cilento said the government should not be afraid to provide continued backing to the hardest-hit industries and individuals to support jobs and incomes, ensuring the recovery is not derailed.
National Australia Bank chief economist Alan Oster agreed there will have to be additional support when JobKeeper is withdrawn.
“It’s a great snap back, the damage that was done to Australia’s economy was much less than we all feared,” he told the conference.
“The big issue … is having saved the economy is to now make it grow even faster.”
Mr Oster said there wasn’t an economist in the country who wants to see JobSeeker return to $40 a day when the coronavirus supplement ends, back to levels when the unemployment benefit was called Newstart.
Ms Hutley said the coronavirus supplement helped to reduce inequality and that the money was directly spent, supporting the economic recovery.
“We saw tremendous benefits to so many families and individuals who could afford three square meals … decent health care and shoes for their kids,” she said.
“If you take that away, we are going to see a huge number of people back into significant disadvantage.”
Catholic Social Services Australia chief executive Ursula Stephens said failure to retain the higher JobSeeker rate will create financial pressure on families that could last generations.
Ms Stephens said there was clear evidence the original rate of JobSeeker was a barrier to work.
“Constantly struggling to pay rent and buy food, let alone health or dental care, makes it hard to look for and interview well for a job,” she said.
“An inadequate unemployment payment, combined with an incredibly tough full-time job market, will see many families and young people face a prolonged period of poverty.”