The federal government has announced a second-stage $66 billion stimulus package designed to help Australia’s economy avoid a Covid-19 related recession, while the nation’s pubs, clubs, casinos, and places of worship are set to shut down as of midday on Monday.
Dubbed the economic “safety-net” package, small and medium-sized businesses could receive tax-free cash payments of up to $100 thousand, along with support for households and assistance for casuals, sole-traders, and retirees.
Prime Minister Scott Morrison says the Commonwealth is also offering to guarantee unsecured loans of up to $250,000 for up to three years, while those in financial stress would be able to tap into their superannuation.
Sunday’s announcement brings the total stimulus package to $189 billion now injected into the economy designed “to keep Australians in work and businesses in business”, Morrison said during Sunday’s announcement.
The $189 billion includes the initial $17.5 billion for government’s economic stimulus package announced on 12 March—only ten days ago—the $90 billion funding facility from the Reserve Bank aimed to encourage lending to small and medium-sized businesses, and the $15 billion amount to deliver easier access to finance for small to medium-sized companies, announced by the treasurer on Thursday.
The total $189 billion figure is the equivalent of 9.7 per cent of GDP.
“There will be more packages, there will be more support,” Morrison said, flagging yet another fiscal injection, as talk on the nation’s economy shifts to talk of recession.
The stimulus package:
Superannuation: Those in financial stress due to the coronavirus could access $20,000 of superannuation over two years.
Government to offer unsecured loans of up to $250,000 for businesses with a turnover of less than $50 million, with no repayments required for the first six months.
Jobseeker allowance is now doubled.
A further $750 payment will be made to those on income support.
Businesses and not-for-profits with a turnover of less than $50 million a year could receive tax free, cash payments starting at a minimum of $20 thousand and up to as much as $100 thousand. The Australian Tax Office will deliver the payment as a credit on activity statements from 28 April.
Increased flexibility in insolvency and bankruptcy laws: Government is temporarily increasing the threshold that creditors can issue a statutory demand on a company, and will give up to six months to respond to the statutory demands they receive.
The package also includes temporary relief for directors from any personal liability for trading while insolvent.
This will see the Corporations Act 2001 amended to provide temporary relief for companies to deal with unforeseen events due to COVID-19.
On Friday, the federal budget was postponed until October, with a new restriction of one person per four square metres announced for indoor venues.
The government was due to deliver the budget in May, but this is now pushed back to 6 October due to “great uncertainty that exists”, with all states and territories also agreeing to push back their budgets.
Morrison outlined that the pandemic is likely to remain a problem for at least six months.
On Thursday, Canberra announced an investment of up to $15 billion towards smaller lenders aimed at supporting Australian consumers and small businesses.
Treasurer Josh Frydenberg revealed the $15 billion package following the Reserve Bank of Australia’s emergency cash rate cut to 0.25 per cent.
The $15 billion amount will be allocated to small banks and credit unions in effort to provide cheaper loans to small business and consumers during a “volatile time in global equity debt and credit markets”, with “small lenders providing competition for larger lenders,” Frydenberg said.
Speaking on the government and RBA measures put in place, Capital Economics said on Friday it expects output to decline by 2 per cent this year, and the unemployment rate to rise to 8 per cent.
With small businesses employing around five million Australians, the Australian Banking Association's chief executive Anna Bligh announced on Friday that the big four banks will defer small business loan repayments for six months during the economic fall out from the coronavirus crisis.