COVID-19 causes government deficit of $6.5bn

The Victorian Treasury has conceded it does not know what the true economic impact of last week’s five-day snap lockdown is but expected it would be “quite minimal”.

Department of Treasury and Finance secretary David Martine was also unable to reveal what the covid-impact had been on timelines for major projects.

He told a parliamentary inquiry Victoria’s recent snap lockdown would have “economic consequences” but did not shed further details.

“A five-day lockdown in terms of its impact on state revenue is likely to be very minimal,” he told the Public Accounts and Estimates Committee (PAEC) hearing on Monday.

“We don’t think a five-day lockdown – while it has some economic consequences – it’s impact on budget estimates itself will be quite minimal in regards to what we put up for the May budget.”

Mr Martine was also questioned about how the government would repay its debt, following revelations in the budget last November the Victorian government had recorded an operating deficit of $6.5bn compared with a forecast surplus of $600m in the last financial year.

“There is no doubt the economy has picked up stronger than we were forecasting back in September and October,” he said.

“We would be expecting upside on our state revenue basis … we’re flowing that through but not predicting or revealing where we might end up in May.”

Mr Martine also said employment growth was “solid” before the pandemic, with a “mostly steady rise” in job numbers between July 2019 and March 2020.

“Victorian employment fell by about 200,000 between March and May of last year, followed by a slight rebound in June,” Mr Martine said.

“Despite the fall late in the financial year, Victorian employment increased by 1.2 per cent in 2019-20 overall – although this was a slower rate of growth than in previous years.”

Mr Martine also warned Australia’s move to shut its international borders at the start of 2020 contributed to Victoria’s population growth falling, with the hard closure expected to continue to have a “significant impact in 2021 and beyond”.

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