The economic shock of coronavirus in Australia has smashed jobs and businesses faster than the Great Depression.
Treasury predicts unemployment to peak at 10 per cent as a result of the pandemic, with some businesses expected to go under.
While the jobless rate was higher during economic devastation through the 1930s, the numbers steadily rose over the course of years rather than months.
“We have never seen an economic shock of this speed, magnitude and shape, reflecting that this is both a significant demand and supply shock,” Treasury boss Steven Kennedy told a Senate committee in Canberra on Tuesday.
He said the world economy could change in important and sustained ways after the shock of the virus subsides.
“Some jobs and businesses will have been lost permanently,” Dr Kennedy said.
Australia’s economic relationship with its largest trading partner China has been dragged into the fray as diplomatic tensions flare between the two nations.
Dr Kennedy believes the crucial financial ties can help both countries recover from the economic crisis.
“There is great economic return to Australia in continuing to support Chinese development and growth through our trade relations,” he said.
Foreign investment rules have been temporarily tightened to give Treasurer Josh Frydenberg more oversight of overseas capital being tipped into Australia.
Dr Kennedy said the government could make the new measures permanent, noting a number of other countries had taken similar steps.
Mr Frydenberg will provide an economic update to parliament’s lower house on May 12.
Finance Minister Mathias Cormann will do the same in the Senate, with both to explain the government’s record $320 billion spend on measures to combat coronavirus.
“The measures we have implemented are temporary, targeted and proportionate to the challenge we face and will ensure Australia bounces back stronger on the other side,” the pair said in a joint statement.
The Morrison government will also provide an update on the economic and fiscal outlook in June.
This year’s budget has been delayed until October because of coronavirus.
Shadow treasurer Jim Chalmers said Mr Frydenberg’s speech would not be a substitute for updated budget figures and forecasts.
“Australians shouldn’t have to wait much longer than usual without the government being upfront with them about the impact of this virus, and the government’s response,” he told AAP.
“A timely and comprehensive economic and budget update is critical to inform decision-making and to give Australians the best chance of a successful recovery.”