Scott Morrison and his treasurer are warning the government cannot stuff an economic cushion full of cash forever.
But one of the prime minister’s former colleagues thinks economists might be too optimistic about how the deep the coronavirus-driven crisis will be in industries like tourism and hospitality.
Mr Morrison is under pressure from some within his party to end the expensive JobKeeper wage subsidy earlier than the planned six months as the nation edges back to normality.
Labor and others say a lower than expected take-up of JobKeeper means it should be expanded to cover short-term casuals and others who missed out.
“The answer is not spending more or spending forever,” the prime minister told coalition colleagues on Tuesday.
“The answer is that Australian businesses – small, micro, medium, large – will rebuild, will re-employ, will restart and engage in this COVID safe economy and do what they’ve always done.”
Treasurer Josh Frydenberg will tell parliament in an economic statement the nation’s finances can only be sustained by a strong and growing economy, which means consumer and business confidence is vital.
“Australians know there is no money tree. What we borrow today, we must pay back in the future,” he will say.
Treasury estimates the first stage of lifting coronavirus restrictions will send a quarter of a million people back to their jobs and add more than $3 billion to the economy.
By the time all states reach the third stage of the progressive reopening, roughly in July, the economy will be growing by $9.4 billion a month and 850,000 more Australians will be back in work.
This figure includes people who have been stood down but are receiving the JobKeeper wage subsidy, who aren’t counted among official unemployment estimates.
Labour force figures out on Thursday are expected to show about a million more people out of work now than in February.
But former federal minister Craig Laundy, who has returned to his pre-politics occupation running pubs in Sydney, says he’s genuinely nervous about what the economy will be like in the final quarter of the year.
He believes unemployment will peak much higher than the predicted 10 per cent, pointing out his industry of hospitality will be very slow to recover.
Even in the third recovery stage, when groups of up to 100 will be able to gather, social distancing rules will still apply, dramatically cutting the amount of floor space restaurants, pubs and hotels can use.
He’s anticipating only being able to fit in about a third of the customers of the pre-virus era.