By Cam Lucadou-Wells
Victoria’s economy is tumbling into “bleak” and “catastrophic” times due to the coronavirus pandemic, the State Treasurer Tim Pallas has warned.
According to government modelling, about 270,000 jobs could be lost, with unemployment to double to a peak of 11 per cent in the September quarter this year, Mr Pallas said.
He also predicted a steep 14 per cent decline in Gross State Product in the June quarter – a $32 billion hole.
The property market will stagnate, prices plummeting nine per cent by the end of the year.
The modelling was based on six months of social distancing restrictions – that was “as bad as it gets”, Mr Pallas said.
And in that case, the economy’s restoration would take years, a gradual “tick” shaped rebound, Mr Pallas said.
“There will be a return to better economic times but it will take time.”
Mr Pallas acknowledged it was a much worse scenario than he thought three weeks ago. International education, tourism and hospitality sectors were the worst hit.
Victorians were “nervous” and “hurting” from the necessary steps to curb the pandemic but he wasn’t “giving up” on any of the 270,000 jobs at risk, he said.
The Government was willing to borrow much of a $24.5 billion emergency line-of-credit and lean on the strength of its triple-A rated economy. Though that top-tier rating is under review by credit agency Standard & Poor’s, Mr Pallas said.
There were no plans to cut back the public sector, he said.
“The world is making a clear and consensus decision that our governments need to step up in defense of our communities.
“If we just balance the books, we’d make a very bad situation much worse.”
Since the crisis, the State Government has paid out $440 million of payroll tax relief to 17,000 small and medium businesses, $110 million in business support grants and accelerated payment of $2 billion in government invoices.
It states it has placed 2000 people back in work due to its Working For Victoria program.
The Government will hold back on new taxes, including a deferral of a $33 million increase in the landfill levy.
Mr Pallas said jobs in IT, remote-work support, call centres, health, supermarkets and food deliveries were still holding strong.
Premier Daniel Andrews termed it as possibly Victoria’s greatest ever economic and unemployment challenge with a “long road ahead of us”.
He said the Government’s huge “construction agenda” would need to get bigger.
Funds needed to be borrowed to “build that bridge” to recovery but the Government would “stand by workers” for the long-term.
“Let’s not be in any doubt they’ll be a lot of pain.”
With just two further Covid-19 cases yesterday, Victorians “significant sacrifices” were bearing “collective success” on the health front, Mr Andrews said.
As of 22 April, the state had 1336 cases – including a revision of two cases which were moved to interstate tallies.
Twenty-nine patients are in hospital, with 12 in ICU. The numbers were holding with a “fragile stability” even during the state’s recently ramped-up testing regime.
By May 11, the state may have “options” to relax some of the restrictions.
But Mr Andrews was cautious not to follow other countries into unleashing a “second wave” of the virus and possibly a cascade of on-again, off-again restrictions.
“It’s nearly the worst way for this thing to unfold.”
