Australia will run budget deficits for foreseeable future: PM Morrison

CANBERRA (REUTERS) – Australia’s budget will be in the red for the foreseeable future, Prime Minister Scott Morrison said on Wednesday (May 12), as he defended his government’s big spending plans as necessary to secure an economic recovery from the Covid-19 pandemic.

Australia’s Treasurer Josh Frydenberg on Tuesday promised billions of dollars of new spending, abandoning the government’s long-cherished pursuit of a balanced budget to bring the economy back to health.

Australia’s annual deficit is forecast to top nearly A$100 billion (S$103.8 billion) over the next two fiscal years, and Morrison said a budget surplus is now not expected for a decade.

“There’s not one scheduled and foreseeable within the next decade because of the significant investments we’ve had to take.

This wasn’t a choice, this is something we had to do,” Morrison told Australia’s Channel 9.

“There’s no politics or ideology in a pandemic, there is just government needing to do what we need to do to save lives and livelihoods and that’s what we’ve done.”

While funds were allocated to extend income tax cuts and corporate incentives for investment, the biggest ticket items in Australia’s latest annual budget was focused on improving aged care and sweeteners for female workers – two key demographics in the next election.

Morrison must return to the polls in the next 12 months and some analysts have suggested the budget could be a springboard for an early ballot. But on Wednesday he said an election would not be held before 2022.

Polls have shown Morrison’s approval rating has fallen amid anger over the government’s handling of allegations of sexual abuse, discrimination against women and misconduct in parliament.

But the prime minister has also won favour with many voters for Australia’s success in effectively eliminating Covid-19, which has seen nearly all social distancing restrictions eased.

Aided by measures including snap lockdowns, closed borders and swift contact tracing, Australia has recorded fewer than 30,000 cases and just over 900 deaths since the virus outbreak swept up several countries early last year.