Morrison steps away from surplus pledge amid 'unknown global shock' of coronavirus

The prime minister refuses to recommit to bringing the budget back into the black in May as promised last year

Scott Morrison has declared the rapidly spreading coronavirus an “unknown global shock” as he stepped away from the government’s pledge to deliver a surplus for the first time in more than a decade.

While dismissing questions about the likelihood of achieving a surplus as “speculation”, the prime minister refused to recommit to bringing the budget back into the black in the May budget, as was forecast in December’s mid-year budget update.

“We will deal with that at the time of the budget,” Morrison said.

“Now when we framed the budget a year ago, hands up those who thought there was going to be a coronavirus epidemic when the budget was released last May? Of course no one did.

“These are unknown global shocks. So we’re dealing with those shocks and we’re processing that through how we look at the budget as we go into May and beyond.”

Morrison said the government would attempt to alleviate some of the economic shocks of the “global health crisis”, which had reverberated through the tourism, education and trade sectors, with a focus on the domestic economy.

However, he warned that the impact on global trade was having a ripple effect on the domestic building and manufacturing industry, amid warnings that supplies from closed Chinese factories may soon run out.

“The world economy has become increasingly interconnected and interdependent over many, many years. And what this impact is is putting up walls and blockages between those connections, between all of these countries. Even without a travel ban, there would have been a significant reduction in the movement of people, as we’re seeing all around the world. That also means the movements of goods and services.”

Morrison warned that the government had “limited” options to prop up the economy through domestic activity.

“The Australian economy will depend a lot more on its domestic elements and it won’t have the same impact from the external components because of the disruption of supply chains and trade impacts and the movement of people,” Morrison said.

“That’s to be expected. But for how long that occurs … that is not clear.”

Morrison said “business-as-usual” could be maintained domestically, but Australia’s economy was now connected globally, with Chinese trade accounting for about 7% of the economy.

The treasurer, Josh Frydenberg, who has just returned from a meeting of global finance ministers in Saudi Arabia, said global growth had been downgraded, but the knock-on effect to the domestic economy was not yet clear.

“Treasury have told me they haven’t finalised their advice on the economic impact of the virus,” Frydenberg said.

He said preliminary work by the International Monetary Fund had indicated that global growth would be downgraded from 3.3% to 3.2% for 2020.

The government has already twice extended a travel ban for Chinese foreign nationals coming to Australia, which is being reviewed on a weekly basis.

But Morrison said the government was not considering extending the ban to other countries where the virus was now affecting significant numbers of people. .

“We have no advice from the medical experts to suggest that that should be done at this point,” he said.


Sarah Martin Chief political correspondent

The GuardianTramp

Related Content

Article image
Morrison warns coronavirus hit could be worse than GFC amid recession predictions
Coalition prepares a multibillion-dollar stimulus package as Australian prime minister says country faces a ‘national interest moment’

Katharine Murphy Political editor

09, Mar, 2020 @4:30 PM

Article image
Scott Morrison announces South Korea travel ban as part of extended coronavirus response – as it happened
Enhanced screening measures to be introduced at airports for travellers arriving from Italy, Australian PM says. This blog is now closed

Amy Remeikis

05, Mar, 2020 @6:19 AM

Article image
Coalition pulls multibillion-dollar coronavirus stimulus plan together
Coalition hopes to boost economy and offset a possible recession with ‘targeted’ plan

Amy Remeikis

08, Mar, 2020 @1:11 AM

Article image
‘Highly disproportionate’: Australia’s casual workers bear brunt of job losses amid lockdowns
Report shows people in insecure, lower-paid positions suffered the worst of the pandemic’s employment impacts in 2021

Paul Karp

03, Oct, 2021 @4:30 PM

Article image
Morrison government to announce new tax breaks designed to get the economy moving in a Covid world
Deregulation and tax concessions outlined ahead of the budget an attempt to frame agenda of next election

Katharine Murphy Political editor

01, Oct, 2020 @5:30 PM

Article image
AFP drops Angus Taylor investigation as Morrison reshuffles cabinet – as it happened
Australian federal police decide not to pursue an inquiry over doctored documents. This blog is now closed

Amy Remeikis

06, Feb, 2020 @6:25 AM

Article image
Coronavirus no excuse to push 'ideological' changes such as company tax cuts, Labor says
Kristina Keneally says there’s no evidence from anywhere in the world that such cuts would boost economic growth

Amy Remeikis

26, Apr, 2020 @4:08 AM

Article image
Scott Morrison wants people weaned off Covid-19 income support. But this strategy carries risks
Governments have special obligations because they made the decision to shut down swathes of the economy

Katharine Murphy Political editor

21, Jul, 2020 @8:46 AM

Article image
Treasurer hands down federal budget derailed by coronavirus pandemic – as it happened
Treasurer hands down federal budget derailed by coronavirus pandemic. Follow all today’s news live

Amy Remeikis (now), and Christopher Knaus and Calla Wahlquist (earlier)

06, Oct, 2020 @11:06 AM

Article image
The two meetings that changed the trajectory of Australia's coronavirus response
Morrison was slow to move on border closures and restrictions on movement and commerce, according to some. But they will be with us for a long time

Katharine Murphy Political editor

03, Apr, 2020 @7:00 PM