Government working to ‘smooth’ economic impact of rolling back subsidies

Cornerstone Group Senior Director James Cullen says the government’s focus will likely be on how to sustain the economy after rolling back the JobKeeper and JobSeeker schemes at the end of September. Economists have predicted Australia’s unemployment rate could reach its highest level since the 1990s, with predictions it could rise from seven to 10 per cent. Mr Cullen told Sky News there would likely be a “investment and demand cliff coming at the end of September quarter” when the JobSeeker amount is pulled back to pre-COVID levels. He said the government should be working on providing other stimulus plans to compensate for “demand” left by the wage subsidy plan and to “smooth out that impact of that cliff that’s coming at the end of the September quarter”. “Managing the outbreak is going to be a continuing pressure on the government but then, in particular, this economy recovery which is not just going to be about today’s data or end of the September quarter, it’s going to be what are the plans to bring the economy back to that proper trend growth between 3 and 4 percent,” he said. Image: Getty

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