Weekly Wrap Up - GRACosway

Highlights

Treasurer Josh Frydenberg and Minister for Finance Mathias Cormann on Thursday released the July Economic and Fiscal Update, which revealed a budget deficit of $85.8 billion in 2019/20 and $184.5 billion in 2020/21.
Following Thursday’s Economic Update, S&P Global Ratings reaffirmed Australia’s AAA credit rating but maintained a negative outlook.
PM Scott Morrison announced the next Parliamentary sitting fortnight will be suspended due to ongoing community transmission of the coronavirus in Victoria.
Credit agency Moody’s has warned state government debt levels will increase by almost $50 billion this year.
In Victoria’s economic update, Treasurer Tim Pallas revealed the state will have a $7.5 billion deficit, while unemployment is expected to rise to 9 per cent in the September quarter. It is estimated the cost of Victoria’s lockdown will cost the national economy $3.3 billion.

National Cabinet meets as case numbers climb in Victoria and NSW

PM Scott Morrison today revealed the National Cabinet has reaffirmed Australia’s suppression strategy, with a goal of no community transmission. National Cabinet also agreed on a more robust set of data to track and document the coronavirus in Australia, providing further detail on how quickly cases are being identified, contacts are being made, isolated and tested. The PM also revealed the National Cabinet has agreed to a streamlined process to launch 15 major projects ahead of schedule to stimulate the economy.

The PM also expressed his solidarity with Victoria, who’s new case numbers reached a record high of 484 on Wednesday. Premier Daniel Andrews revealed as many as nine in 10 Victorians did not isolate in between feeling sick and getting their tests, while 50 per cent of Victorians did not isolate between getting tested and receiving their test results. While confirmed new cases dropped to 300 on Friday, the Premier once again urged Victorians to isolate themselves and get tested if they felt sick. Mr Andrews this week also announced a $300 payment for workers who are unable to access sick leave as they wait for test results. Face masks became mandatory across Melbourne and Mitchell Shire from 11.59pm on Wednesday night, with Victorians facing a $200 fine for not complying. Meanwhile, as NSW recorded seven new cases on Friday, it was announced hospital staff in NSW will now be required to wear masks within 1.5 metres of patients. Elsewhere, NSW Minister for Customer Service Victor Dominello issued a reminder that new compliance measures introduced to pubs are to be extended to restaurants, bars, cafes and clubs.

JobKeeper and JobSeeker extended

On Tuesday, PM Scott Morrison and Treasurer Josh Frydenberg announced changes to the JobKeeper and JobSeeker payments. The JobKeeper payment will be extended to 28 March 2021, with the Government to apply stricter eligibility requirements. The Government will also reduce the value of the payments from the first week of October, and introduce two tiers to the subsidy based on hours worked. The PM also announced the income free threshold for JobSeeker will be increased to $300, while the coronavirus supplement will be reduced to $250. The PM did not rule out another round of income support after March next year, and said the Government would work to ensure the economic fallout of the coronavirus crisis would be minimised.

Despite the substantial budget deficit revealed by the Treasurer and Minister for Finance on Thursday, reports this week have suggested the PM is facing internal pressure to bring forward $143 billion in personal tax cuts. Liberal MPs have argued a faster cut to income taxes would improve economic activity and encourage people to work. MPs have also urged the PM to cancel an increase in the super guarantee levy to 12 per cent, to ease the cost on employers.

Overhaul of environmental laws

This week, the Interim Report of the Independent Review of the Environment Protection and Biodiversity Conservation (EPBC) Act was released, calling for a major overhaul of Australia’s national environment laws. The author of the review, Professor Graeme Samuel, said there is too much focus on process, as opposed to outcomes, and concluded Australia’s environment was ultimately getting worse under existing laws. Minister for the Environment Sussan Ley rejected Professor Samuel’s recommendation to establish an “independent cop” arguing it would layer another layer of regulation. However, Minister Ley promised draft laws to allow bilateral agreements with states and territories to devolve federal approval powers and include a version of national environmental standards proposed by Professor Samuel. The Government will also commence an engagement process for modernising the protection of indigenous and cultural heritage.

Looking ahead

The NSW Legislative Assembly will sit next week. National Cabinet is meeting today and then Friday 6 August.