Australia to fast track infrastructure spending in 2020/21 budget

By Lidia Kelly

MELBOURNE, Oct 5 (Reuters) - Australia will fast track infrastructure projects worth some A$7.5 billion ($5.39 billion) to support its coronavirus-hit economy, the government said on the eve of the 2020/2021 (July/June) budget announcement to be delivered on Tuesday.

Normally presented in May, the budget has been delayed as the government wanted more time to assess the pandemic's impact. In the June quarter, the economy suffered its deepest slump on record as coronavirus curbs crippled business activity.

Analysts expect the government to forecast a record budget deficit of around A$200 billion ($142.7 billion) for 2020/21, up from an estimated A$85.3 billion last year.

As the crisis unfolded, the government has already announced A$314 billion of fiscal stimulus for this year and more spending is promised in Tuesday's announcement. The government's balance sheet is expected to stay in the red for at least the next four years.

"This investment through Tuesday's budget will boost the national economy," Prime Minister Scott Morrison was quoted as saying in a press release announcing the A$7.5 billion spending on road and rail projects.

It will also support an estimated 30,000 direct and indirect jobs, Morrison added.

Australia has so far fared much better than many countries in managing the spread of the coronavirus, thanks to swift and strict measures. It has recorded just over 27,000 cases and 894 deaths.

But like elsewhere, the economic impact has wrecked revenues, while making it imperative for the government to spend much more.

"The numbers will be bad, but we know why we're here" Finance Minister Mathias Cormann told the ABC National Radio on Monday.

The budget, based on the assumption that there will be a novel coronavirus vaccine next year, is "all about jobs" Treasurer Josh Frydenberg said over the weekend.

Frydenberg will deliver the budget to parliament at around 7.30 pm (0830 GMT) on Tuesday.

It also includes tax cuts, incentives for hiring and investment, and spending on manufacturing, tourism and banking.

"The budget will be judged on the ability to create and sustain jobs and keep business in business, rather than being judged on meeting specific fiscal and economic forecasts," Craig James, chief economist at the CommSec brokerage firm, said in a research note.

($1 = 1.3916 Australian dollars) (Additional reporting by Swati Pandey in Sydney; Writing by Lidia Kelly; Editing by Simon Cameron-Moore)