Australia adds A$66.4 billion in stimulus to protect the economy

Reading Time: 3 minutes

 

Australia’s government will spend additional A$66.4 billion ($38.50 billion) as part of a second stimulus package to shelter the economy from the financial impact of the coronavirus, Prime Minister Scott Morrison said on Sunday, as states moved to impose major lockdowns.

The new stimulus will go to individuals in need and small and medium-sized businesses. Those businesses produce about a third of the country’s annual economic output and employ more than 40% of the workforce, according to government statistics.

“We will be focusing on those in the front line, those who will be feeling the first blows of the economic impact of the coronavirus,” Morrison said in Canberra on Sunday. “There will be more packages and more support.”

The Government is providing up to $100,000 to eligible small and medium sized businesses, and not‑for-profits (including charities) that employ people, with a minimum payment of $20,000.  These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.

Under the enhanced scheme from the first package, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000. The payment will be available from 28 April 2020.

See full Australian Government stimulus plan here

By linking the payments to business to staff wage tax withholdings, businesses will be incentivised to hold on to more of their workers.

The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.

This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).

Small and medium business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs entities, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.

An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.

The package, which dwarfs the A$17.6 billion ($10.20 billion) in initial measures announced last week, came with a pledge by the government to enforce social distancing rules after many Australians appeared to disregard health warnings and flocked to pubs and beaches amid a warm autumn spell.

After an initial relatively slow spread, the number of coronavirus infections in Australia has been rising quickly in recent days, climbing to 1,098 confirmed cases as of Sunday morning with seven recorded deaths linked to COVID-19.

Morrison said that the government would help underwrite loans to small and medium-sized businesses and boost unemployment benefits as companies are forced to lay off staff.

Jobseekers will get extra money and people in financial stress will also be able access up to A$10,000 tax-free of their pension funds for this and next year, while some not-for-profits and small businesses will have access to cash grants to keep staff employed.

Together with more than A$100 billion announced earlier in emergency banking measures to prevent a credit freeze and the initial stimulus package, Australia has now announced financial measures equaling about 10% of the country’s annual gross domestic product, the government said.

 

 

 

Once you're here...