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More than a quarter of a million jobs could be lost in Victoria due to the coronavirus pandemic, according to modelling from the state's Department of Treasury and Finance.
Key points:
- The Treasury secretary said Victoria was facing economic challenges not seen in generations
- Unemployment is forecast to rise as high as 11 per cent while property prices are expected to fall by up to 9 per cent
- Treasurer Tim Pallas said the $24.5 billion emergency fund would be vital in getting Victoria through the crisis
Treasury forecasts 270,000 Victorians could be out of work as a result of the economic and health crisis, with Victoria's unemployment rate peaking as high as 11 per cent in the September quarter, more than double the current rate.
Victoria's gross state product may also fall by an unprecedented 14 per cent relative to previous forecasts.
The property market, a major source of government revenue, will also be hit, with prices predicted to fall by up to 9 per cent by the end of the year.
The modelling assumes coronavirus restrictions will remain in place for six months.
September quarter expected to be the worst
Treasury secretary David Martine said Victoria was facing economic challenges not seen in generations.
"The modelling will enable the Government to plan and deliver measures to support workers and businesses, as well as the state's economic recovery after the pandemic," he said.
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The State Government is preparing to borrow an extra $24.5 billion to set up an emergency fund it can draw down on, to help the state recover from the pandemic over the next two years.
The money will add to the state's debt, which is believed to be between $50-$70 billion.
Treasurer Tim Pallas said the figures showed the impact of the coronavirus would get significantly worse before it got better and the recovery would be longer than first expected.
"We're expecting the September quarter of this year will be where most of the damage to jobs and economic growth will occur and we will see those numbers start to improve as we go forward," Mr Pallas said.
"The modelling paints a bleak and devastating picture for our economy which is unprecedented in our lifetimes.
"But the one piece of good news is Victoria does have the capacity to help those who need it most."
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Mr Pallas said the emergency fund would be "vital" in ensuring Victoria got to the other side of the pandemic.
"I expect the most adverse impacts of this pandemic will be upon us before the end of this year and a substantial amount of the recovery will occur in 2021," he said.
"But it will take years for us to get to the position that we were previously in prior to the onset of the pandemic."
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Victoria's budget was already under pressure before the crisis due a slowing property market and rising wage costs.
MPs will return to State Parliament for a special one-day sitting on Thursday to vote on a raft of law changes including allowing judge-only trials, the suspension of bail reporting conditions as well as the $24.5b emergency fund and supply bills.
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