The Prime Minister has called on the states and territories to invest an additional $40 billion towards the economy, which has taken a massive hit as a result of Covid-19.
Scott Morrison said on Friday that, with rates low and expected to stay that way for another three years, governments needed to lift their fiscal investment in infrastructure and programs over the next two years.
“The Reserve Bank governor called on the states and territories today to lift their fiscal investment over the next two years in programmes of the nature that I’ve outlined... to the tune of 2 per cent of GDP or $40 billion over the next two years,” Morrison said.
Currently, the states and territories have contributed around $48 billion towards “fiscal intervention” during the crisis.
But the Prime Minister stressed that further investment would not need to happen immediately.
“Don’t expect the states and territories to be making announcements tomorrow morning,” Morrison said.
“It will need to be done in a careful and purposeful way, in a way that builds and works off its testing programs to get the maximum efficiency, that extends capital programs that are already in place - like JobTrainer itself.”
Morrison said states were better placed to absorb this debt as their debt to GSP (state GDP) ratio was “far less” than what it was for the Commonwealth, but urged their expenditure to be “targeted”.
“Expenditure needs to be purposeful, it needs to be targeted, it needs to go where it’s going to have the best effect,” he said.
The Prime Minister indicated expenditure would likely go towards water, school programs, energy, transport, hospitals and social housing, Morrison said.
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