SYDNEY (Reuters) – Australia on Friday delayed its federal budget by five months to October saying the coronavirus pandemic made it impossible to make sensible economic forecasts, as it prepared to dramatically expand its stimulus spending to avoid recession.
FILE PHOTO: Tables at an open restaurant are seen mostly deserted on a quiet morning at the waterfront of the Sydney Opera House, where scheduled public performances have been cancelled due to the coronavirus disease (COVID-19), in Sydney, Australia, March 18, 2020. REUTERS/Loren Elliott
The country’s banks said separately they would defer loan repayments for small businesses impacted by coronavirus for six months at a cost to their bottom lines of A$8 billion ($4.7 billion), amid fears of massive job losses.
“The idea that you can actually put together any sort of forecast around the economy at this time is simply not sensible,” said Treasurer Josh Frydenberg, who welcomed the banks’ move as a “game changer”.
The country of 25 million people has seen only seven deaths from the flu-like virus but its case numbers have jumped to almost 800 in recent days, and the government is stepping up limits on movement including a ban on all foreign arrivals.
About 2,700 passengers from the Ruby Princess cruise ship that disembarked in Sydney on Thursday were ordered to self-isolate after three of them tested positive for the novel virus which can cause a respiratory disease known as COVID-19.
“Our big concern, the very big concern, is that those people came off the cruise with no knowledge of COVID actually being on their ship,” said Brad Hazzard, the health minister of New South Wales state of which Sydney is the capital.
In a move presaging a possible shut-down of entertainment venues, Prime Minister Scott Morrison urged people to “do the right thing” and keep a distance of four square meters (43 square feet) between each other at indoor gatherings.
Visits to remote indigenous communities would be restricted to protect vulnerable populations, but schools would remain open in the “national interest”, he added.
“At the end of the day, you don’t stop this virus, but you can defeat it by slowing it down. And that is how we save lives,” Morrison told reporters in Canberra.
Fears of a surge in unemployment mounted on Thursday when flagship carrier Qantas Airways Ltd (QAN.AX) told most of its 30,000 employees to take leave, as the virus ravaged the global aviation and tourism industries.
Australian Banking Association Chief Executive Anna Bligh said small businesses employed about five million people in the country, and loan relief was vital if they are to “keep their doors open”.
The loan relief came as the government signaled it would announce further stimulus spending on the weekend.
The size of the package is still be determined, but Australian media reported it could be worth around 3%-4% of Australia’s A$2 trillion economy, or up to A$80 billion.
Treasurer Frydenberg only last week announced stimulus spending worth A$17.6 billion to stop the country slipping into its first recession in nearly 30 years, with support for the health sector, small businesses and apprentices, among others.
Frydenberg declined to comment on the size of the next package, but told the Australian Broadcasting Corporation it was “about cushioning the blow for those Australians who may find themselves out of work”.
The stimulus expected over the weekend will complement a A$100 billion package unveiled by the Reserve Bank of Australia and the government on Thursday.
Australia’s central bank bought A$5 billion ($2.9 billion) in local government bonds on Friday, in the first round of its unlimited quantitative easing program as it looks to cushion the economic shock from the coronavirus pandemic.
In a separate statement, the government said it would buy A$15 billion of residential mortgage-backed securities and other asset backed securities over the next 12 months.
Reporting by Colin Packham and Swati Pandey in Sydney; Editing by Stephen Coates