The Australian Government has today released the second stage of its economic plan to cushion the economic impact of the coronavirus and help build a bridge to recovery.
A total of $189 billion is being injected into the economy by all arms of Government in order to keep Australians in work and businesses in business.
This includes $17.6 billion for the Government’s first economic stimulus package, $90 billion from the RBA and $15 billion from the Government to deliver easier access to finance, and $66.1 billion in today’s economic support package.
The economic support package includes:
· Support for households including casuals, sole-traders, retirees and those on income support
· Assistance for businesses to keep people in a job
· Regulatory protection and financial support for businesses to stay in business
The Prime Minister Scott Morrison said the Government was acting to cushion the blow from the coronavirus for businesses and households to help them get through to the other side of the crisis.
“We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back,” the Prime Minister said.
“Our focus is on cushioning the blow and providing hope to every Australian that we will get through this and come out the other side together.
“We know this will be temporary. That’s why all our actions are geared towards building a bridge, keeping more people in work, enhancing the safety net for those that aren’t and keeping businesses alive so they can get to the other side and stand up their workforce as quickly as possible.
“We know Australia’s more than 3 million small and medium businesses are the engine room of our economy. When they hurt, we all hurt.
“The next few months are going to be a difficult journey but we all have a role to play to adapt to the changes we’re facing, to cushion the impact of what is happening and to pull together so we can bounce back when we get to the other side.”
The Treasurer Josh Frydenberg said the $189 billion economic support package was the equivalent of 9.7 per cent of GDP.
“The Government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months.
“These measures build significantly on what we have already announced.
“These extraordinary times demand extraordinary measures.”
The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
The Coronavirus supplement will be paid for the next 6 months. Eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.
This measure is estimated to cost $14.1 billion over the forward estimates period.
An increase of up to 5,000 staff for Services Australia will assist to support delivery of new Government measures.
Payments to support households
In addition to the $750 stimulus payment announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.
This second payment will be made automatically from 13 July 2020 to around 5 million social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners.
This measure is estimated to cost $4 billion over the forward estimates period.
Early release of superannuation
The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months. They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
This measure is estimated to cost $1.2 billion over the forward estimates period.
Reducing social security deeming rates
On top of the deeming rate changes made at the time of the first package, the Government is reducing the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA.
As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent.
This measure is estimated to cost $876 million over the forward estimates period.
Assistance to business to keep people in a job
Boosting Cash Flow for Employers
Small and medium-sized businesses with turnover under $50 million, along with not-for-profit charities, will be eligible for a tax-free cash payment of up to $100,000.
The payment will be worth 100 per cent of the tax those entities withhold from their employees’ salaries and wages.
Eligible businesses will get a minimum of $20,000.
This is a dramatic escalation of a previously announced policy, which limited the payment to a maximum of $25,000 and a minimum of $2000.
This measure is estimated to cost $31.9 billion over the forward estimates period, including the value of the measure announced in the first package.
Regulatory protection and financial support for businesses to stay in business
The Government will establish the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus.
The scheme will support up to $40 billion in lending (meaning the government is guaranteeing $20 billion).
Once again, the threshold for eligibility is turnover under $50 million. This policy will apply to loans granted within six months, starting on April 1.
The Government will guarantee up to $20 billion to support $40 billion in SME loans.
Providing temporary relief for financially distressed businesses
The government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company, and the time companies have to respond to statutory demands they receive.
This also includes temporary relief for directors from any personal liability for trading while insolvent.
Support for the aviation industry
As previously announced, the Government is also providing up to $715 million in support for Australian airlines and airports, which will ensure that the aviation sector receives timely cash flow support through an unprecedented period of disruption to international and domestic air travel.