Home featured Credit: William Iven Australian Budget 2020 Expert Featured Australian Budget 2020 ‘The $1 trillion budget deficit’: Economists on the 2020-21 Budget Ann Wen October 7, 2020 The 2020-21 Budget delivers the biggest Australian deficit since World War 2. The Government’s fiscal stimulus of $51 billion during the GFC pales in comparison to the $257 billion in spending unveiled by the Treasurer yesterday. We asked leading Australian economists for their first impressions on the budget and how it affects business investment in the short and long term. Stephen Halmarick, Chief Economist and Head of Global Markets Research, CBA “Extraordinary times gives you extraordinary outcomes.” Despite the alarming levels of debt, Mr Halmarick lauded the 2020-21 Budget as a largely effective economic strategy. “We thought the budget was good. The underlying cash deficit is very large, just shy of $214 billion (11 per cent of GDP). However the best way to think about it is that although debt is rising substantially – it’s going up to $966 billion – the economic return on that debt is going to far exceed the interest costs of that debt.” The 2020-21 Budget’s focus on boosting cashflow also “hastens the recovery for the economy.” “This is all about providing cash flow to individuals by bringing forwards tax cuts and providing incentives to businesses to employ people,” said Mr Halmarick. Mr Halmarick was also optimistic about the relationship between the Government and the RBA in weathering the crisis together. “There is a large deficit but