Finance Minister Mathias Cormann has said Australia needs to taper its reliance on JobKeeper and JobSeeker payments, as the country’s debt estimates mount to more than $850 billion.
Speaking on ABC’s Insiders program, the Liberal senator said the economy needs a phased transition back to normal conditions by the end of March 2020.
At the end of September, the federal government’s JobKeeper wage subsidy scheme will lower payments from $1500 to $1200 per fortnight.
“We do need to transition out of this historically unprecedented crisis level, fiscal support and get the economy into the new normal in an appropriately phased transition,” Mr Cormann said.
“If facts change, we’ll reassess what may or may not be appropriate at the time.”
Treasury has previously predicted gross debt for the end of the financial year would stand at $852 billion, or 45 per cent of gross domestic product.
Mr Cormann said the uncertainty surrounding Victoria’s inability to contain the virus and newly imposed border shutdown, could result in changes to the government’s current policy stance.
“We’ve been flexible in the past when it comes to what has been a rapidly evolving and fluid situation.,” he said.
“We’ve responded to things as they’ve emerged. But you know, moving forward, our intention is to transition the economy and to transition the fiscal policy settings back to the new normal by the end of March.”
The federal government is expected to hand down its federal budget on October 6 which will reveal the financial damage inflicted by the coronavirus pandemic.
Mr Cormann noted Australia’s economic recovery will be dependent on overseas demand for exports, particularly in commodities such as iron ore which is currently running at prices above $US100 per tonne.