The Prime Minister reflected this afternoon that he thinks we have already reached the turning point in the coronavirus pandemic, however containment measures – including social distancing – need to remain in place.
In the first move towards recovery, the National Cabinet has announced an easing of restrictions on elective surgery after the weekend. There will be a phased approach to the number and kinds of elective surgeries that will go ahead. This is in response to what Minister for Health Greg Hunt called a sustained and consolidated flattening of the curve. In the last three days, there has been an average of 0.5% growth in new cases – a positive sign the strategies in place are working.
To support the increase in elective surgery some 60m face masks have already been sourced with an additional 100m masks to arrive in the next six weeks. The next major milestone to review additional reductions on elective surgery will be 11 May 2020 – if the trend continues along this vein we can be hopeful for additional restrictions to be eased.
In addition to elective surgery changes, the Prime Minister also provided an update on aged care, with a clarification that residents should be able to receive visits from family members. Providers are encouraged to manage this through robust monitoring of the health of visitors, as well as restrictions to numbers and duration of visits.
An update on Jobseeker and JobKeeper
The levels of claims for Jobseeker is starting to slow but is still very high. To date, there have been 517,000 Jobseeker applications processed since 16 March 2020.
In response to questions around the potential for not needing as much of the funding for Jobseeker and JobKeeper if our recovery is faster than anticipated, the Prime Minister reinforced that the funds set aside for these programs are set as a safety net for Australians and they are prepared to meet those costs.
Reserve Bank of Australia sees potential for growth by the end of the year
The Reserve Bank of Australia’s (RBA) Governor Philip Lowe also provided an update this afternoon, forecasting national output will fall by around 10% through the first half of this year with most of this decline occurring in the June quarter. The RBA is also aligned to Treasury forecasting 10% unemployment by June.
Addressing inflation, the RBA is anticipating a significant decline in the June quarter due to the large fall in oil prices, the introduction of free childcare and the deferral or reduction in some price increases. It is likely that year-ended headline inflation will turn negative in June, the first time this has happened since the 1960s. However, in underlying terms inflation is expected to remain positive.
Based on how containment of the coronavirus is going to date, the RBA suggests a plausible scenario would be the lifting of restrictions by the end of the year with the exception of international travel. If this is the case then the economy could begin to bounce back in the September quarter with the potential for a GDP growth of between 6-7% next year. This will balance out the fall of around 6% experienced this year.
$3b has been drawn under the Term Funding Facility
Around $3b of the initial $90b Term Funding Facility has already been drawn, with around 35 institutions participating so far. The knowledge that ADIs have access to this scheme over coming months has reduced any concerns there might have been about possible future liquidity strains.
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