• Prime Minister Scott Morrison has told Australians they will eventually pay the price for record spending in the wake of COVID-19.
• The Morrison government has suggested budget repair would begin once unemployment falls to 6%, currently expected before the 2023-24 financial year, and will likely involve a mix of spending cuts and taxes.
• Addressing the National Press Club, Morrison indicated threw cold water on the idea of further support measures, saying “you can’t run the Australian economy on taxpayers’ money forever”.
• Visit Business Insider Australia’s homepage for more stories.

The Prime Minister has all but ruled out any new major economic support measures, insisting there’s ‘plenty of gas in the tank’.

Addressing the National Press Club on Monday, Scott Morrison indicated the extraordinary emergency measures taken last year, totalling $251 billion, would not be followed by further stimulus.

“Our task now is to continue our economic recovery by sticking to our economic recovery plan. And importantly, exercising the fiscal discipline necessary to ensure that we do not over-burden future generations and continue to spend taxpayers’ money wisely,” he said. “We are not running a blank cheque budget.”

The speech reintroduces the idea of fiscal responsibility that has taken a backseat during the last ten months. While the Morrison government has repeatedly refused to again extend measures like JobKeeper, Thursday marks a return to the premise of budget repair.

“Our medium-term strategy remains to stabilise and reduce debt… you can’t run the Australian economy on taxpayers’ money forever,” he said.

The government’s strategy at this point in time is clear. Wind up cornerstone programs like JobKeeper and the JobSeeker supplement, make no further commitments, and let pent up demand, funded by a $200 billion savings stockpile, flow into the real economy.

In lieu of additional spending, the government expects smaller existing measures, including legislated company tax cuts and the JobMaker credit for workers 35 years and younger, to be sufficient.

Morrison suggested infrastructure may continue to be a focus, but has so far shown little appetite for reform.

Unemployment acceptable at 6%

Front-running part of the Prime Minister’s speech, Treasurer Josh Frydenberg readjusted the government’s economic goalposts on Sunday.

His mid-year economic and fiscal outlook (MYEFO), delivered just weeks ago, has placed new significance on getting unemployment to 6%, a target which Treasury had forecast wouldn’t be reached for three more years. It currently sits at 6.6%.

While he expects national debt to eventually exceed $1 trillion, austerity measures won’t be prioritised before unemployment is brought down.

Noting there had been “improvements in the labour market since MYEFO”, Frydenberg suggested budget repair could occur sooner.

Emblematic of the ‘new normal’, ideal unemployment had been considered to be 4.5% before the pandemic hit.

While Morrison used the same speech to lambast raising taxes to curb carbon emissions, a budget recovery on a trillion dollar scale would in all likelihood require them, alongside spending cuts.

Certainly, it was the warning given in April by Anthony Albanese, who warned Australians they may be ‘taxed for a generation’ to pay for support measures.

Government criticised for reigned in spending

Labour however struck a different tune in responding to Morrison’s speech on Monday however, as Shadow Treasurer Jim Chalmers insisted the government needed to do more of the heavy lifting still.

“Today at the press club he had the opportunity to set out what he would do for those 2 million Australians who cannot find a job or who cannot find enough hours to support their loved ones. All of those millions of Australians who cannot get ahead because wages were stagnant before and they are especially stagnant now, this was his opportunity today and he missed [it],” Chalmers said.

“If this government wasted less money on these rorts they would have more money to help people in this country who are still struggling in an economy which are still struggling with the share of challenges.”

It comes amid calls for JobKeeper to be extended or at least targeted to specific industries as industries like tourism struggle to get back to their feet.

“There is a very real possibility that employers will not be able to retain staff without the JobKeeper scheme, leaving thousands of Australians unemployed or without enough hours to sustain themselves and their families,” ACTU President Michele O’Neil said.

“The Prime Minister is demonstrating that he has no understanding of the uncertainty facing millions of Australians. The Australian economy has not recovered, and the burden is being shouldered by working Australians.”

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.