COVID COST: Will Warwick weather worst deficit since WWII?
EMERGENCY economic measures have plunged the Australian economy into the largest budget deficit since World War II, but the downturn is unlikely to affect Warwick residents according to Warwick Credit Union CEO Lewis von Stieglitz.
Federal financial assistance, such as JobKeeper and JobSeeker, created an additional $164 billion in public spending, prompting treasurer Josh Frydenberg to forecast a deficit of 9.7 per cent of gross domestic product this financial year.
The reward will be worth the cost, Mr von Stieglitz explained.
“It’s the budget deficit we have to have,” he said.
“Australia has the financial strength, and it needs to use it to help people.”
Mr Von Stieglitz said the financial future of Warwick may hinge on such assistance, because jobs and businesses are harder to build back up once they’ve disappeared from regional areas.
Unlike previous budget deficits, the low GDP itself is not expected to impact Warwick’s bottom dollar.
“Normally when the government has a big deficit it sucks all of the money out of the economy and the interest rates go up,” Mr von Stieglitz said.
“But at the moment there’s so much money in the economy, and the interest rates are so low, so that’s not going to happen.
“No one will be competing with the government for money in the market, but we will get whatever upside comes out of (their spending).”
The region previously suffered financially through the double whammy of drought and bushfires, but Mr von Stieglitz says, if anything, it prepared residents for the new challenge of coronavirus closures.
“The economy itself is pretty quiet, and it’s a tough slog for everyone, but we thought things would be much worse now than what they actually are,” he said.
“People here have already battened down the hatches and tightened their belts.”