"This is a heavy burden,but a necessary one to responsibly deal with the greatest challenge of our time,"he said.
Total extra spending will cost the budget almost $160 billion this financial year and another $53.9 billion in 2021-22.
But the recession has also taken a huge bite out of the budget – almost $60 billion in 2020-21 and another $66.4 billion the following year. In 2023-24,the recession will hurt the budget by $84.5 billion.
Tax hit
The government has been forced to write down personal income tax collections this year by $25.4 billion,with some of that due to tax cuts.
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But higher unemployment and slow wage growth will continue to punch holes in personal tax collections,which between 2020-21 and 2022-23 have been written down by $108.4 billion.
Expected company tax collections have also been slashed. This year,rather than $100.8 billion being collected as forecast in last year's budget,the government expects to raise $86.2 billion.
By 2022-23,the difference between last year's forecast and this year's will widen to almost $37 billion. Much of the reduced company tax collections are due to the government's business incentives but even by 2023-24,corporate tax revenue will be lower than it was in 2018-19.
So pervasive is the economic hit delivered by the recession,tax collections from beer and tobacco excises,the luxury car tax and petrol excise have been written down over the next four years.
GST revenues to be shared among the states and territories are forecast to be $25.8 billion lower over the forward estimates. The first state to update its budget will be Western Australia this week while all others will have to write down their GST forecasts.
While taxes have slipped,the government is expecting to raise larger dividends from public sector operations such as the Reserve Bank. More than $2 billion in dividends is forecast to be collected this year and next before an abnormal collapse predicted for the 2022-23 financial year.
Record debt
The collapse in revenue translates into record debt. After predicting last year that gross debt would peak at $585 billion in 2022-23,the government expects it to reach $1.1 trillion in that year and continue growing.
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As a share of GDP,gross debt is forecast to stabilise around 55 per cent and then remain at that level to the end of the decade. Last year,it was expected to fall to just 13 per cent by 2029-30.
Mr Frydenberg will increase the government's debt ceiling for the second time this year,elevating it to $1.2 trillion.
Despite the huge increase in debt,the nation's interest bill is expected to only modestly increase.
In last year's budget,the government expected its net interest bill to reach almost $16 billion by 2022-23. It now expects it to reach $17.9 billion that year and then $18 billion in 2023-24 despite an extra $500 billion in debt.
It is due to a collapse in world interest rates that has enabled governments including Australia to take on much more debt without incurring a steep increase in borrowing costs.
"Historically low interest rates mean the cost of servicing this debt remains relatively low,"Treasury said.
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