Slade Brockman (WA, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance, Senator Cormann. Can the minister inform the Senate how Australia's economy is leading the developed world in its recovery from the COVID-19 pandemic induced economic crisis?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I thank Senator Brockman for that very important question. The Organisation for Economic Co-operation and Development has released a very important report overnight which shows the devastating effects that COVID-19 and the COVID-19 pandemic are having on the world economy. Importantly, what the OECD report shows is that Australia is leading the developed world in its economic recovery from the COVID-19 crisis. The OECD expects economic growth in Australia to rebound, despite the global economy facing, 'the deepest recession since the Great Depression', with the loss of income exceeding 'any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments'. The OECD is forecasting global growth to fall by at least six per cent in 2020, and that is in the absence of a second wave of infections. To put this in context, global growth fell by just 0.1 per cent in 2009 during the so-called global financial crisis and is now forecast to fall by at least six per cent, as long as we can avoid a second wave of infections.

According to the OECD, the outlook for Australia is the third best among all OECD members. The OECD forecast for Australia is for GDP to contract by five per cent in 2020 before bouncing back to 4.1 per cent growth in 2021. Australia's economic outlook for 2020 compares remarkably well with other countries. The United Kingdom is forecast to contract by 11.5 per cent, France by 11.4 per cent, Italy by 11.3 per cent, New Zealand by 8.9 per cent, Canada by eight per cent and the United States by 7.3 per cent. Indeed, the OECD average contraction is 7.5 per cent— (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Brockman, a supplementary question?

Slade Brockman (WA, Liberal Party) Share this | Link to this | Hansard source

I thank the minister for the first answer. Can the minister inform the Senate of the dangers to our economy if a second wave of COVID-19 hits Australia?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

Yes, I can. The OECD report makes it very clear that the economic consequences of a second wave of infections would be 'dire' for both the Australian and the world economies. In the event of a second wave the report said: 'The global economy would likely contract by a further 1.6 per cent. The Australian economy would contract by a further 1.3 per cent.' That means our economic contraction would jump from five per cent to 6.3 per cent under the second-wave scenario, which would be an extra $25 billion blow to our economy. But it wouldn't stop there. A second wave would also hit our forecast recovery in 2020-21 by 3.1 per cent, which would mean an $80 billion blow to our economy over two years. That would cost thousands of Australian jobs. That is why every Australian has a patriotic duty to do everything they can to help minimise the risk of a second wave. That is why every Australian must heed the health advice and must not attend mass protests at this time.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Brockman, a final supplementary question?

Slade Brockman (WA, Liberal Party) Share this | Link to this | Hansard source

Can the minister inform the Senate what else the OECD has said about Australia's response to the COVID-19 crisis?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I thank Senator Brockman for that supplementary question. The OECD has praised Australia for acting quickly to close our borders and put in place the necessary health restrictions which helped us to successfully flatten the curve. The OECD has praised Australia for its massive macroeconomic support. That economic support was only possible because we entered this crisis from a position of economic and fiscal strength. Growth was increasing at the end of last year. Unemployment was falling in February. We had returned the budget to balance for the first time in 11 years. Because of that strength, we have been able to provide support of $260 billion, or 13.3 per cent of GDP, in support of workers, households and business. There's still a long way to go in recovering from this once-in-100-years global pandemic, but we're heading in the right direction. It is important that we remain vigilant and that all Australians do everything they can to avoid a second wave of infection.