Treasurer Josh Frydenberg says the federal government has done everything possible to cushion the blow for Australians throughout the coronavirus crisis, as new figures confirm the nation's first recession in almost three decades.
Mr Frydenberg on Wednesday responded to the latest figures from the Australian Bureau of Statistics (ABS) that showed Australian Gross Domestic Product (GDP) fell seven per cent in the June quarter - the largest quarterly fall on record.
The data also confirmed a 0.3 per cent drop in GDP in the March quarter, meaning the nation has had two consecutive quarters of negative growth - the common definition of recession.
"Today's national accounts confirm the devastating impact on the Australian economy from COVID-19," Mr Frydenberg said on Wednesday after the figures were released.
"Our record run of 28 consecutive years of economic growth has now officially come to an end. The cause? A once-in-a-century pandemic."
ABS Head of National Accounts Michael Smedes said the seven per cent fall was prompted by the global pandemic and associated containment policies.
Treasurer Josh Frydenberg speaks to the media during a press conference at Parliament House in Canberra. Source: AAP
"This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959," Mr Smedes said.
Mr Frydenberg said the results are consistent with Treasury forecasts, adding the federal government's strong economic position going into the crisis meant it could respond better and avoid the fate of many other developed nations.
"Australia's economic performance sits among the top of those developed nations as a result of our health and our economic plan to fight the virus," he said.
"We didn't go down the path of countries like Sweden, which put few restrictions in place. At the same time we didn't go down the same path of countries like France which accepted and adopted extreme lockdowns, totally shutting down large parts of their economy.
"Instead, we chose our own path and put in place billions of dollars of support for Australians to build a bridge to the other side of this crisis."
Mr Frydenberg said 700,000 more jobs would have been lost and the unemployment rate would have been five percentage points higher without the government's economic support.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg during Question Time at Parliament House in Canberra. Source: AAP
"We have done everything possible to cushion the blow for the Australian economy from COVID-19," he said.
"Our priority has and will continue to be saving lives and ensuring that Australia's healthcare system has the capacity to test, trace and treat coronavirus cases."
What did the figures show?
The record fall in GDP was driven by the private sector, much of which was shut down during the pandemic, as private demand took 7.9 percentage points from economic growth in the quarter.
Household consumption expenditure fell 12.1 per cent, which included a 17.6 per cent drop in services expenditure, with falls in transport services, operation of vehicles and hotels along with cafes and restaurants.
The household saving to income ratio rose from six to almost 20 per cent.
"The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus," Mr Smedes said.
The new data also shows a record 2.5 per cent drop in wages, which were supported by JobKeeper payments, while social assistance payments jumped 41.6 per cent due to a greater number of people claiming unemployment benefits along with additional coronavirus supplements.
Mr Frydenberg said the data reflects a "clear industry story" of the differential impacts the public health restrictions have had across industries.
But he said the fall in the June quarter does not include the economic impact from the stage four restrictions imposed by the Victorian government in early August.
"This is something that will weigh heavily on the September quarter numbers," My Frydenberg said.
The treasurer predicts the nation's September quarter will be "negative or flat" with respect to economic growth. He is keenly awaiting Victoria's roadmap out of its lockdown, due for release on Sunday.
"I had indicated that publicly at the time that the stage four restrictions were announced," Mr Frydenberg said.
"Now, of course, the stage four restrictions are expected to come off in Victoria mid-September; if there were any changes to that timeline, then that would impact upon Treasury's forecast."
'The road out will be bumpy'
Despite Wednesday's national accounts, the treasurer said there is a road to economic recovery, with the government's JobMaker plan.
The economic plan includes a $1 billion JobTrainer fund to help create 340,700 new training places and a further $1.5 billion in support for small and medium businesses to retain their apprentices.
"Today’s devastating numbers confirm what Australia knows, that COVID-19 has wreaked havoc on our economy and our lives, like nothing we have ever experienced before," he said.
"But there is hope. And there is a road out."
The treasurer said the government's plan for recovery has seen hundreds of thousands of Australian get back to work, and thousands of Australian businesses open their doors.
He told the Australian people the government "has [their] back".
"We are with you through this crisis. And we will be with you all the way out of this crisis."
Additional reporting by AAP.
