Australian govts debt will increase significantly: treasurer

CANBERRA - Australia's Treasurer has declared that the nation is "at war" with the COVID-19.

Josh Frydenberg on Tuesday fronted Parliament to deliver a special ministerial statement on the economic impact of the COVID-19 crisis.

He said that the economic fallout of the virus has been "sobering", revealing that the total face value of Australian Government Securities on issue has risen from 560 billion Australian dollars ($361 billion) to 618 billion Australian dollars ($398.4 billion) as of Friday (May 8, 2020).

"While there will be a significant increase in government debt which will take many years to repay, our measures have been designed in a way that protect the structural integrity of the budget," Frydenberg said.

According to figures cited by the Treasurer, the ASX200 (Australian Securities Exchange) lost more than a third of its value over four weeks between March and April, house sales have fallen 40 percent and international and domestic air travel has declined 97 percent.

As a result, the number of jobs in Australia declined by 7.5 percent between March 14 and April 18 while the wage bill paid by businesses decreased by 8.2 percent.

"Australia finds itself at war against a faceless and flagless enemy," Frydenberg said.

"The coronavirus has created a one in a hundred year event."

"A health and economic shock the likes of which the world has never seen."

Australia has announced a timeline for easing COVID-19 restrictions.

Treasury estimates that 850,000 Australians will return to work by July if restrictions are gradually eased under the three-stage plan outlined by Prime Minister Scott Morrison on Friday.

However, Frydenberg warned that the economy would face significant losses if restrictions have to be re-imposed because of a spike in confirmed cases.

"These improvements in the economy depend on us continuing to follow the health advice," he said.

"Failing to do so could see restrictions re-imposed at a loss of more than 4 billion Australian dollars ($2.57 billion) per week to the economy.

This is the economic cost we will all bear if we fail to act."

Tuesday was Parliament's first sitting day since it was suspended in April to prevent the virus from spreading among politicians.

Prior to being suspended, the government legislated some coronavirus economic stimulus measures, including a 130 billion Australian dollar ($83.7 billion) wage subsidy package.

Frydenberg was due to deliver the Federal Budget for financial year 2020-21 in May but will now do so in October in order to come to terms with the full economic cost of the coronavirus pandemic.

He had promised to deliver Australia's first budget surplus since the Global Financial Crisis (GFC) in 2019-20, but a deficit is expected when the budget is released in October, according to local media.

Despite facing a significant increase in government debt, Frydenberg said on Tuesday that the government would not raise taxes.

Instead, he committed to paying off the deficit by "growing the economy through productivity enhancing reforms."

"Given the level of uncertainty, our economic measures provide more than financial relief," he said.

"They provide a psychological boost as well."

"The new spending measures were not designed to go forever but to build a bridge to the recovery phase."

The economic update came one day after Anthony Albanese, the leader of the Opposition Labor Party, called on the government to use the crisis to reshape Australia's economy.